In the report released on August 2, NIO points out:
- NIO delivered 7,931 vehicles in July 2021, an increase of 124.5% year-over-year
- Cumulated deliveries of ES8, ES6 and EC6 as of July 31, 2021 reached 125,528
With this, NIO shows that it is in a tight competition against other Chinese electric vehicle manufacturers: Li Auto (NASDAQ: LI), which delivered 8,589 vehicles in July and XPeng (NYSE: XPEV) which delivered 8 040 vehicles. It appears that Chinese electric vehicle manufacturers are in a tight race not to fall behind the competition when it comes to vehicle deliveries.
Considering the cumulative figures, NIO is the undisputed leader in this category.
Two new pieces of information are also very important for the outlook of the electric vehicle industry in China. It appears the Chinese government is leading a campaign to support and protect electric vehicle manufacturers, and NIO is well positioned to benefit greatly.
In the first report, (Sources 1, 2) China asks for more support for the national electric vehicle market, which implies concrete actions from Beijing and subsidies. In the second statement, China announced launch an investigation into manufacturers of chips for the automotive industry and severely punish price measurement, hoarding and price hikes.
While we wait for NIO’s second quarter earnings report, due August 11, we want to get a better idea of what to expect in the short and long term.
From first quarter results, NIO topped revenue guidance by a solid 17%, reaching CN ¥ 8.0b. Statutory losses also exploded, with the loss per share reaching 3.14 CN, or 216% more than analysts expected.
Profits are an important time for investors, they indicate whether the company is in line with promises and expectations. WWe have put together the latest post-earnings forecast to see what the estimates suggest for next year.
See our latest review for NIO
After the latest results, the 21 analysts covering NIO are now forecasting CN 35.3 billion in revenue in 2021. If achieved, that would reflect a major 55% improvement in sales from the past 12 months.
Loss per share is expected to decline significantly in the near future, narrowing 43% to 3.83 CN. Yet before the latest results, analysts were forecasting revenues of CNN 35.3 billion and losses of CN 3.83 per share in 2021.
As you can see, NIO is not expected to become profitable anytime soon, and we would like to stress that this is intentional as new companies have to reinvest heavily in R&D, marketing, production, etc., in order to remain competitive. Since NIO targets mass markets, it still has a long way to go to ensure quality and production capacity (original or third party).
As a result, there have been no major changes from the consensus price target of US $ 61.00, implying that the company is trading roughly in line with expectations despite ongoing losses. There is another way to think about price targets, however, and that is to look at the range of price targets offered by analysts, as a wide range of estimates might suggest a different view of the possible outcomes for the market. company. NIO’s most bullish analyst has a price target of US $ 91.93 per share, while the most pessimistic puts it at US $ 42.27.
Looking at the big picture now, one of the ways we can make sense of these forecasts is to see how they stack up against both past performance and industry growth estimates. We can infer from the latest estimates that the forecast calls for a continuation of historical trends for NIO, as the 79% annualized revenue growth through the end of 2021 is roughly in line with the 71% annual revenue growth over the course of 2021. for the past three years.
In contrast, our data suggests that other companies (with analyst coverage) in a similar industry are expected to see their revenues grow by 22% per year. So it’s pretty clear that NIO is expected to grow much faster than its industry.
NIO is on the right track and is somewhat exceeding its near-term expectations, and we can expect a solid quarterly release on August 11.
The top three competitors compete aggressively for investor attention, and that should make us a bit cautious in interpreting the numbers when there is a strong incentive to cross a psychological threshold – in this case, 8,000 vehicles.
NIO is reinvesting, and the industry is backed by the government, which should give them a boost in growth in the coming period.
TThe company still expected to grow faster than the industry as a whole. The consensus price target remained at US $ 61.00.
That said, the company’s long-term earnings trajectory is much bigger than next year. At Simply Wall St, we have a full range of analyst estimates for NIO through 2023, and you can view them for free on our platform here.
However, before you get too excited, we’ve found out 2 warning signs for NIO that you need to be aware of.
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Simply Wall St analyst Goran Damchevski and Simply Wall St have no positions in any of the companies mentioned. This article is general in nature. It does not constitute a recommendation to buy or sell shares and does not take into account your goals or your financial situation. Our aim is to bring you long-term, targeted analysis based on fundamental data. Note that our analysis may not take into account the latest announcements from price sensitive companies or qualitative documents.
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