Al Root

NIO shares fell early Wednesday after Chinese electric-vehicle maker reported weaker-than-expected third-quarter earnings.

There is room for growth for Chinese EV makers, but competition is hurting profitability.

U.S.-listed NIO American depositary shares were down 4.3% in premarket trading, while S&P 500 and Dow Jones Industrial Average futures were up 0.1% and 0.2%, respectively.

NIO announced a third-quarter adjusted loss per share of 31 cents on sales of $2.7 billion on Tuesday. According to FactSet, Wall Street was looking for a loss of 20 cents a share on sales of $2.7 billion.

Gross-profit margins were almost 11% for the quarter, a little better than Wall Street projected.

NIO delivered 61,855 vehicles in the third quarter, up 12% from the 55,432 delivered in the third quarter of 2023. Vehicle revenue, however, dropped about 4% year over year. Revenue growing slower than deliveries has been a theme for Chinese auto makers in 2024 amid stiff competition.

Looking ahead, NIO expects to ship 72,000 to 75,000 vehicles in the fourth quarter, up about 44% to 50% year over year. That is similar to the 45% to 51% year-over-year growth projected by NIO peer XPeng, which reported third-quarter earnings on Tuesday.

NIO expects total fourth-quarter revenue to rise about 17%, hitting $2.9 billion. That's short of Wall Street's estimate for sales of nearly $3.2 billion.

Coming into Tuesday, NIO stock has fallen about 49% this year. Lower prices and higher competition have weighed on investor sentiment.

Management hosts a conference call at 7 a.m. Eastern time to discuss results. Analysts and investors will want to hear more about demand, competition, and the outlook for 2025.

Chinese EV news can always move Tesla stock. The country accounted for almost 40% of Tesla's third-quarter deliveries. Tesla stock, however, hasn't been significantly affected by NIO or XPeng earnings. Tesla stock rose 2.1% on Tuesday while XPeng shares fell 3.8%. Tesla stock was down 0.5% in Wednesday premarket trading at $344.45.

Despite the small drop to start Wednesday, Tesla shares have been exceptionally strong since the Nov. 5 U.S. presidential election, gaining 38% through Tuesday's trading. Tesla shares added 5.6% on Monday after Bloomberg reported President-elect Donald Trump would seek to set a federal standard to help regulate self-driving cars.

Write to Al Root at allen.root@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

November 20, 2024 07:26 ET (12:26 GMT)

Copyright (c) 2024 Dow Jones & Company, Inc.