Chinese electric scooter maker Niu Technologies (NASDAQ:NIU) stock plunged Monday after the company swung to a second-quarter loss and reported a sharp decline in gross margin despite double-digit revenue growth and stronger sales in China.

Niu Stock Slides As Company Swings To Q2 Loss

The company reported second-quarter revenue of 1.44 billion Chinese yuan ($212.29 million), up 14.7% year over year, driven by a 24.2% increase in sales volume, partially offset by an 8.6% decrease in revenues per e-scooter. Basic and diluted net loss per ADS was 19 cents.

Adjusted net loss was 98.2 million Chinese yuan, compared with adjusted net income of 13.7 million Chinese yuan a year earlier.

Niu sold 434,687 e-scooters during the quarter, up 24.2% from a year earlier. China sales climbed 26.2% to 402,202 units, while international sales grew 3.6% to 32,485 units.

China Market Fuels Sales Momentum

Revenue from China e-scooter sales rose 14.6% to 1.21 billion Chinese yuan, accounting for 91.9% of total e-scooter revenue. The increase was supported by a 26.2% rise in sales volume, partially offset by a 9.2% decrease in revenues per e-scooter in China market.

International e-scooter revenue grew 3.0% to 106.3 million Chinese yuan driven by higher sales volume of electric motorcycles and mopeds in international markets.

Accessories, spare parts and services revenue increased 29.0% to 123.5 million Chinese yuan, helped by growth in the Niu App business as well as accessories and spare parts sales.

Gross margin contracted to 16.0% from 20.1% a year earlier, primarily driven by shifts in product mix in the China market, higher product costs across the upstream supply chain, and lower gross margin on kick-scooters in international markets.

The company ended the quarter with 1.48 billion Chinese yuan in cash, term deposits, and short-term investments in aggregate.

Niu Profitability Under Pressure

Profitability came under pressure during the quarter as Niu sharply increased spending on marketing, technology, and expansion initiatives while simultaneously working through elevated overseas inventory levels.

Operating expenses surged 28.6% year over year to 340.6 million Chinese yuan as the company front-loaded branding campaigns, expanded domestic store openings, and invested in AI-related technology modules ahead of an expected market recovery.

Niu executives said the company is shifting its growth engine toward electric motorcycles, AI-enabled products and a recovering international business as it works through pressure in China’s premium e-bicycle market.

Electric Motorcycles Drive China Growth

CEO Yan Li said Niu’s China sales rose 26% year over year in the second quarter, driven by strong demand for electric motorcycles as regulatory changes and weaker top-tier city demand pressured the premium e-bicycle segment.

He said electric motorcycles accounted for about 60% of China sales volume and helped offset industrywide weakness in e-bicycles.

Li said Niu is expanding its electric motorcycle lineup with products such as the N Fengchi series for delivery professionals and the NX Marathon series for longer-range commuting.

He added that the company will keep leaning into electric motorcycle momentum in the third quarter while reintroducing mid- to high-end compliant e-bicycles in the 5,000 Chinese yuan-7,000 Chinese yuan price range to lift average selling prices and protect margins.

AI, Channels And Overseas Recovery Support Outlook

Li said Niu is integrating AI features such as Niu AI OS, screen navigation, triple-camera systems, AI pets and AI voice interaction across several mass-production models.

He also pointed to online sales growth, with online channels rising 50% year over year and accounting for 64% of domestic retail sales.

Internationally, Li said overseas electric motorcycle sales rose 50% year over year as Niu expanded its direct-to-retailer network and increased sales of higher-end 125cc-plus models in Europe.

He said the company will keep using an asset-light, profitability-first approach in emerging markets and expects overseas inventory to return to a healthier level by year-end.

Niu Outlook And Stock Performance

For the third quarter, Niu forecast revenue between 1.863 billion Chinese yuan and 2.033 billion Chinese yuan, representing growth of 10% to 20% year over year.

NIU Price Action: Niu shares were down 14.23% at $2.105 at the time of publication on Monday, according to Benzinga Pro data.

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