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Markets think NIO can double sales in 2023 and believe losses have peaked.
 

When will NIO release Q4 earnings?

NIO will release fourth quarter and full year 2022 earnings before US markets open on Wednesday, March 1. A conference call will be held on the same day at 0700 ET (2000 HKT).
 

NIO Q4 earnings consensus

NIO is expected to report a 75% rise in revenue in the fourth quarter to RMB17.2 billion and its adjusted loss per share is expected to swell to RMB1.88 from RMB1.07 the year before.

If it meets expectations, that puts NIO on course to report a 41% rise in annual sales to RMB50.8 billion and a loss of RMB6.56 per share compared to the RMB1.89 loss seen in 2021.
 

NIO Q4 earnings preview

Chinese electric vehicle maker NIO delivered 122,486 vehicles in 2022. It warned in late December that it was facing ‘challenges’ with production and deliveries and that Covid-19 induced supply chain disruption was persisting, and investors will hope these are starting to ease now that the economy is reopening and the country is putting the virus behind it. 

That will dictate how the ramp-up advances this year, and expectations are high. Analysts think NIO can more than double output and sell over 245,000 vehicles in 2023.

Notably, Volume growth is being driven by new models. Sales of its first model, the ES8, fell in 2022 and are expected to be down over 29% over the full year. Demand for the EC6 has also dropped and severely softened for the ES6. That has been countered by the ET7 and ET5, both of which were only launched in 2022 and are expected to account for all of NIO’s volume growth in 2023 (particularly the new ET5).

Revenue is expected to rise at a slower rate than sales volumes thanks to the price war that is erupting. Electric vehicle makers, having been forced to raise prices in the inflationary environment, are now trying to unwind these increases and undercut rivals in an effort to drive up demand. Revenue is forecast to rise 84% in 2023. The focus on the premium end of the market should shelter it from any drop-off in demand following the end of Chinese subsidies at the end of 2022.

Meanwhile, NIO’s losses ballooned to record levels in 2022. Margins have been squeezed by rising material costs and operating expenses are forecast to have jumped almost 75%, including a more than doubling of R&D expenditure. NIO is still far from profitability, but analysts believe 2022 will represent the peak for losses and that these will start to shrink in 2023 and beyond.

Margins should have bottomed out in 2022 and are poised for a recovery this year as improved scale lowers the cost of production and inflationary pressures ease.

NIO is forecast to have burnt through around RMB10.9 billion in 2022 and should have ended the year with around RMB18.4 billion in cash. NIO will continue to see its cash balance dwindle this year but markets think the cash burn will more than halve.
 

Where next for NIO stock?

NIO shares have continued to lose ground and are on the cusp of testing the 28-month low of $9.00. The downtrend that spans back to December 2021 is still in play despite the brief outbreak we saw last September.  

Investors will hope that this will provide some support. We saw the RSI slip into oversold territory when it last hit this level and we can see the indicator is on the cusp of entering it again. A slip below here could open the door to a move below $8.00.

The downtrend is currently aligned with the moving averages, making $11.00 the first upside target for the stock. From there, it can look to recapture $13.25 to move above the January ceiling and the bottom we saw last March.

The 30 brokers that cover NIO believe the selloff has been overdone with the average target price of $17.75 implying there is over 85% potential upside from current levels.

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