Nio (NYSE: NIO) stock has beaten the brakes off the market over the past month. The Chinese EV-maker is up 20% in that time and 55% in the past six months.
Take a look at NIO’s recent results and it’s easy to see what’s fueling the stock’s massive rally. Deliveries, earnings, and margins are all up, painting the picture of a company that’s on the verge of competing with Tesla.
Why Nio Stock Is on Fire
Nio’s second-quarter earnings dropped in September. They showed a remarkable 98% increase in revenue. The top line totaled $2.4 billion, topping analysts estimates of $2.35 billion.
Still, it wasn’t all volume. Nio also improved its margins, earning more money per vehicle sold. The company’s vehicle margin almost doubled, climbing to 12.2% from 6.2% in the second quarter of 2023 thanks to lower material costs. Gross margin was 9.7%, up from 1% last year.
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As a result, Nio’s gross profit came in at $232.4 million, expanding by magnitudes from $12 million in 2023. However, the company still registered a loss, though one smaller than analysts expected.
Nio’s loss totaled $0.34 per share, slimmer than analysts’ forecast of $0.46 and a marked improvement from the $0.51 per share loss from last year.
Clearly, these are very good second-quarter numbers. But we’ve gotten even more bullish results in the weeks since.
First, the company got a massive injection of cash from investors.
Specifically, Nio China is raking in nearly $2 billion (13.3 billion yuan) from its parent company and a group of strategic investors based in China. The investor group is offering up a combined sum of 3.3 billion yuan, or about $471 million. And Nio will channel another 10 billion yuan, or roughly $1.4 billion, into its subsidiary.
And secondly, Nio’s September sales figures, which came out last week, were an early indicator of another strong quarter. The company delivered 21,181 vehicles in September — a 35% increase from last year and the fifth consecutive month that the total has topped 20,000 units.
Better still, Nio launched deliveries of its new, lower-cost Onvo brand. The company delivered 832 Onvo vehicles in September.
And to top it all off, Nio says its total third-quarter deliveries hit a record 61,855 vehicles, topping last year’s third quarter by 12%. That’s in line with the company’s previous guidance and suggests third-quarter revenue will come in at the higher end of its estimated range of $2.63 billion–$2.71 billion.
So you can see what all the excitement is about. Nio is ramping up deliveries, stacking up revenue, and speeding toward profitability.
However, it’s not necessarily the best way to play EVs. Its recent surge has blown up the stock’s valuation, and the Chinese ADR will likely stay volatile given the uncertain picture of China’s economy and the potential escalation of the EV trade wars that have developed with the West.
Investors could net a more stable return from something like the “Plug-in Payouts” program. Plug-in Payouts directs EV charging station revenue directly to investors. In fact, it generated $563.3 million in income for its patrons last year.
So if you really want to profit from EVs, check that out here.
Fight on,
Jason Simpkins
Simpkins is the founder and editor of Secret Stock Files, an investment service that focuses on companies with assets — tangible resources and products that can hold and appreciate in value. He covers mining companies, energy companies, defense contractors, dividend payers, commodities, staples, legacies and more…
In 2023 he joined The Wealth Advisory team as a defense market analyst where he reviews and recommends new military and government opportunities that come across his radar, especially those that spin-off healthy, growing income streams. For more on Jason, check out his editor’s page.
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