NIO earnings miss estimates. But there is some good news for Tesla and BYD.

Chinese electric vehicle startup NIO’s second-quarter results were worse than expected. Shares didn’t take much of a hit in early trading, given the third quarter was so good.

That’s a relief for NIO (ticker: NIO ) investors. It’s also good news for Chinese EV leaders Tesla ( TSLA ) and BYD ( 1211.Hong Kong ).

On Tuesday N.I.O reported Adjusted for a second-quarter loss of 45 cents a share on sales of $1.2 billion. According to Bloomberg, Wall Street expects a loss of about 33 cents per share on sales of $1.3 billion.

The total loss was slightly larger at 41 cents per share, estimated by FactSet. Sales estimates remained the same. FactSet is a collection of five numbers. Bloomberg used nine estimates.

A year ago, NIO reported an adjusted loss of 19 cents per share on sales of $1.5 billion. Year-on-year sales fell due to reduced supply. NIO delivered around 23,500 units in the second quarter, down from around 25,000 units delivered in the second quarter of 2022.

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Gross profit margins for the second quarter were around 1%, down from 1.5% in the first quarter.

Shrinking margins, higher-than-expected losses and lower deliveries are not great news. But looking ahead, NIO expects to deliver 55,000 to 57,000 units in the third quarter. Wall Street expects nearly 50,000 units.

NIO shares were higher in early trading on Tuesday, but were down 0.9%.


S&P 500

And


Nasdaq Composite

Futures were both up about 0.1%.

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However, it didn’t quite hit the mark, and third-quarter guidance should help support some stocks on Tuesday. When it came to earnings, investors had a lot of questions about competition, demand, pricing and the Chinese economy.

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NIO responded to a query with delivery guidance. It is returning to growth after a relatively weak quarter for sales. Increasing deliveries to NIO is also a small plus for China’s overall EV demand.

Battery-electric vehicle demand rose 25% year-over-year in the first seven months of the year, according to data compiled by Citi analyst Jeff Chung. That’s strong, but August sales are down a little year over year.

Chinese EV makers and Tesla’s sales decline may be due
,

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It has reduced the prices of around 25 models in the month of August.

Investors should continue to watch sales numbers from other EV makers and NIO to gauge how EV demand will look in late 2023. China is the world’s largest market for new electric vehicles.

Weak sales and pricing have weighed on NIO shares. In Tuesday trading, shares have fallen 45% in the past 12 months and 28% in the past month. The


S&P 500

By comparison, it’s down about 10% over the past 12 months and 4% over the past month.

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Shares of Tesla, the world’s largest maker of battery-electric vehicles, have fallen about 11% in the past month. Shares of BYD, China’s largest maker of battery-electric vehicles, have fallen about 18% in recent months.

NIO management will hold a conference call at 8 a.m. ET to discuss the results. Analysts and investors will want to learn more about all the issues affecting stocks: supplies, demand and the state of the Chinese economy.

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Write to Al Root at [email protected]

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