INSUBCONTINENT EXCLUSIVE:
Shares of NIO, a China-based electric car manufacturer, are soaring this morning after the company Q3 2019 earnings beat investor
NIO surprise win comes directly on the heels of Tesla, a competitor, announcing the delivery of its first cars made in China, NIO home
market.
NIO went public on the New York Stock Exchange in 2018 for $6.26 per share
Its value has plunged as a public company, seeing its per-share price fall to as little as $1.19
Today, after its earnings report, NIO shares are up more than $1 apiece, to $3.47 per share as of the time of writing
That new price represents a gain of a touch less than 44% in today trading.
Earnings
NIO managed to beat both revenue and profit
expectations in the quarter
And, the company forecast for its next quarter car deliveries show a sharp rise in automotive deliveries.
According to Yahoo Finance,
investors expected NIO to lose $0.34 per share in Q3 on an adjusted basis off revenue of $230.8 million
In fact, NIO reported $257.0 million in revenue leading to an adjusted $0.33 per share loss
NIO managed a top-and-bottom beat while growing its total revenues by 21.8% compared to the sequentially preceding quarter, and 25% compared
to the year-ago period.
While NIO did beat expectations, it remains a company deep in its investment cycle
That a polite way of saying that it loses lots of money
For example, in its most recent quarter, NIO gross margin on selling automobiles came to -6.8%
That was a bit worse than its year-ago result of -4.3%, if better than what it managed earlier in Q2 2019.
NIO core business can&t even
cover its cost of revenues, let alone the operating costs of the rest of the company
This means that the company is consuming cash, putting an end date on its ability to operate without more cash.
As NIO put it in its
earnings letter (emphasis: TechCrunch):
The Company operates with continuous loss and negative equity
The Company cash balance is not adequate to provide the required working capital and liquidity for continuous operation in the next 12
The Company continuous operation, which has also constituted the basis of preparing the Company third quarter unaudited financial
information, depends on the Company capability to obtain sufficient external equity or debt financing
The Company is currently working on several financing projects, the consummation of which is subject to certain uncertainties
The Company will announce any material developments or information subject to the requirements by applicable laws.
So, NIO needs more money
Luckily for it, with a newly risen share price the firm has a better shot at selling more of itself to raise the capital it needs to stay in
business and grow.
And grow it intends, with a written expectation of delivering &over 8,000& vehicles in Q4 2019, which it notes is about
two-thirds more than it managed in Q3 2019; so NIO is telling investors that its revenue will be sharply higher in the current period than
it was in the preceding three-month period.
All good news for NIO, even if Musk and company are breathing down its neck
And good news for the 2018 IPO class.
