The Latest Results Signal More Trouble Ahead for NIO Stock

Investors slide lower in February No (NYSE:NEVER) were perhaps expecting NIO stock to start the new month with a big bullish move following the release of the China-based electric vehicle maker’s latest quarterly results.

Unfortunately, far from recovering from the gains, NIO made yet another move lower after the March 1 earnings release. With both earnings and guidance falling short of expectations, the market rightly bid the shares down after these disappointing numbers.

Although this pullback is relatively modest after Nio’s gains, a bottoming may not be imminent. This latest disappointment further questions whether the company, after underdelivering in the second half of 2022, will finally beat, or at least meet, expectations in the second half of this year.

For now, barring subsequent developments to the contrary, it is best to assume that this faltering EV stock will remain in a slump on the way to lower prices.

NIO Stock and Current Earnings

For the quarter ended December 31, 2022, Nio reported revenue of approximately $2.3 billion. While that represented a significant increase from the year-ago quarter’s revenue figures (around $1.6 billion), Nio’s Q4 2022 number fell short of the sales side’s forecast ($2.5 billion).

For the fourth quarter, net losses were $838.9 million, or 51 cents a share. Those losses were more than double those reported in the fourth quarter of 2022 and almost double analysts’ expectations for the quarter (around 26 cents per share). If that’s not bad enough, as I mentioned above, Nio was also blown away with his latest guidance/view.

For the current quarter, the EV maker expects to ship 31,000 to 33,000 of its vehicles and generate revenue of $1.6 billion to $1.7 billion. Ahead of the earnings numbers, Wall Street was expecting around $2.5 billion in revenue for the first quarter of 2023.

With such lackluster numbers, it’s somewhat surprising that NIO stock has only posted a single-digit decline since earnings were released. Then again maybe not. There’s still a narrative that offers some support for stocks, but it continues to fade.

Why the “reacceleration narrative” might continue to fade

With NIO trading for just a fraction of its all-time closing high ($62.84 per share) today, you might already be thinking that the “story” behind Nio has already been fully unraveled. Sure, few hold firm that this company remains on track to become a peer-to-peer leader in the EV space Tesla (NASDAQ:TSLA).

But among investors who are still highly bullish on NIO stock, there is still a belief that after many setbacks, this company’s “takeoff moment” will finally arrive. With the release of new vehicle models, China’s economic recovery, and the EV competitor’s expansion into overseas markets like Europe, these investors believe Nio will see a substantial reacceleration in sales growth.

In turn, you drive a step out of the red and towards consistent profitability. This will allow the stock to zoom back to much higher price levels. While many NIO investors still believe in this “reacceleration narrative,” their numbers may continue to dwindle.

That’s not to say NIO will see a hard crash any time soon. However, it could signal that if short-term results remain weak, further loss of confidence in the “narrative” will keep shares at their current price.

The judgment

Most of the latest news from Nio is negative in nature. However, I’ll admit that the company’s February shipping figures (released along with earnings) were a bit promising. During the month, Nio delivered 12,157 vehicles. This represented a 43% increase in shipments from January.

However, that may not be a sign that things are improving here. As per the guidance above, the company expects (at best) March deliveries to exceed that figure by just a few hundred vehicles.

Worst-case scenario, increasing competition from Tesla and the end of Chinese EV subsidies could continue to weigh on demand this month and into spring.

Other signs point to further disappointments. As this will further erode the “reacceleration” narrative, stay away from NIO stocks.

NIO stock receives a D rating in portfolio grader.

At the time of publication, neither Louis Navellier nor the InvestorPlace researcher primarily responsible for this article held any position (either directly or indirectly) in any of the securities mentioned in this article.