Nio likely to report weak Q2 earnings on Sept 24

China-based electric carmaker Nio Inc. (NYSE: NIO) is set to report its second-quarter earnings results on Tuesday, September 24, before the market opens. The bottom line will be hurt by higher costs and expenses while the top line could be benefited by higher deliveries.

The results were hurt by challenging sales environment and slow macro-economic conditions in China that was caused by the trade war with the US. The company has been facing hurdle with regard to manufacturing its vehicles in higher volumes than its present capabilities. Also, Nio is struggling to secure additional funding for increasing volume and satisfying the customers need.

Nio is expected to invest continuously in research and development as well as sales and marketing as new vehicle models and enhanced versions of existing vehicle models are likely to be introduced in the future. The investments are anticipated to not result in an increase in revenue or positive cash flow in the near future.

Investors expect the company to elaborate more on the activation of full features of NIO Pilot advanced driving assistant system (ADAS) system during the second quarter call. During June, Nio added seven features in an update to NIO Pilot that included Highway Pilot, Traffic Jam Pilot, Auto Lane Changing and more.

For the second quarter, the company expects the sales environment to be more challenging with an overall sequential decline in demand and deliveries, as competition accelerates and the general automobile market in China remained muted.

Read: 7 headwinds that could hamper Nio growth

Analysts expect the company to report a loss of $0.18 per share on revenue of $185 million for the second quarter. In the first quarter, Nio posted an adjusted loss of $0.36 per American Depository Share (ADS) on revenue of $243.1 million. Majority of the analysts recommended a “hold” rating with a price target of $5.19 per share.

For the second quarter, deliveries totaled 3,553 units, exceeding the midpoint of the company’s previous guidance range of 2,800 to 3,200 units by 18.4%. Nio expects second-quarter total revenue in the range of RMB1,134 million to RMB1,294 million ($169 million to $193 million), down about 20.7% to 30.5% from last quarter.

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