Nio Stock Falls 3.8% as Q2 Revenue Misses Despite Strong Delivery Growth

Nio Inc. (NYSE: NIO), a prominent Chinese electric vehicle (EV) manufacturer, experienced a decline of 3.8% in pre-market trading after its second-quarter revenues missed Wall Street predictions, despite a robust performance in deliveries and a slight earnings beat. The company reported quarterly sales of $2.65 billion, marking a 9% increase year-over-year, yet falling short of the expected $2.73 billion. However, adjusted earnings per ADS stood at $0.32, surpassing the forecast of $0.31.

In the recently concluded second quarter, Nio delivered 72,056 vehicles, reflecting a 25.6% year-over-year increase and nearly 71% growth from the first quarter of fiscal year 2025. Looking forward, the company projects third-quarter vehicle deliveries to range between 87,000 and 91,000 units, denoting growth between 41% and 47%. For Q3FY25, Nio anticipates total revenue to be between $3.04 billion and $3.19 billion, translating to a year-over-year increase of 16.8% to 22.5%.

The company posted a net loss of $685.2 million in the second quarter, which the company indicated was the best outcome since the last quarter of 2023 as ongoing cost-cutting measures take hold. This net loss showed a 5.8% year-over-year decrease and a significant 23.5% improvement compared to the first quarter. The vehicle margin dropped to 10.3% from 12.2% the previous year, attributed mainly to changes in product mix, including the introduction of the lower-priced sub-brands, Onvo and Firefly.

Nio's co-founder and president, Lihong Qin, noted that the third quarter marks a pivotal moment for the company, which is regathering momentum after overcoming challenging cycles. Meanwhile, the company's cash position as of June 30 remained robust at 27.2 billion yuan ($3.8 billion).

Despite the anticipated growth in deliveries, analysts remain divided on Nio's long-term outlook, citing potential margin compression risks from an emphasis on volume growth via its sub-brands. Gross margin for the quarter increased to 10.0% from 7.6% in the previous quarter, slightly above the 9.7% from the same period last year. Operating losses narrowed year-over-year and sequentially, thanks mainly to restructuring and efficiency measures instituted earlier in the year.

CEO William Bin Li emphasized the critical nature of achieving profitability by the fourth quarter and reiterated this target as essential. He noted strong demand for the ONVO L90 and the refreshed NIO ES8, crediting NIO’s comprehensive battery-swapping and charging infrastructure for supporting the company's push into new market segments.

CFO Stanley Yu Qu highlighted ongoing cost-reduction and efficiency initiatives, which have already resulted in a 30% improvement in adjusted operating loss sequentially, even when excluding restructuring charges. Nio's strategic focus remains on balancing rapid growth with the need to maintain financial discipline amid intensifying EV market competition and potential profitability constraints.

For the third quarter, Nio forecasts revenues between 21.81 billion and 22.88 billion yuan ($3.05 billion to $3.19 billion), suggesting a year-over-year growth of 16.8% to 22.5%. This is, however, below the analyst consensus of $4.69 billion, underscoring the challenges Nio faces in sustaining its momentum within the context of evolving market expectations.

Investors and analysts will closely monitor Nio’s ability to reconcile its growth ambitions with profitability pressures, especially in light of its ongoing investment in vertical integration and the market's heightened anticipation of sustained growth amid a competitive landscape.