NIO - Nio record deliveries for Q2 'paint a more positive picture'

2024-07-01 09:22:37 ET

Nio Inc (NYSE: NIO) is pushing to the upside today after reporting a near 100% year-on-year increase in its June deliveries.

Shares of the electric vehicles company are still down close to 50% versus the start of 2024.

Nio deliveries more than doubled in Q2

Nio delivered a total of 21,209 vehicles last month – up a whopping 98.15% versus a year ago. 9,628 of those were sedans while 11,581 were sport-utility vehicles, as per a press release on Monday.

The EV company also reported 57,373 deliveries for its second quarter as a whole this morning, which translates to about a 144% growth on last year.

Encouraging deliveries update from the Shanghai-headquartered firm helped shares of its U.S. rival Tesla Inc climb back to over $200 on Monday as well.

What helped Nio deliveries climb in the second quarter?

Note that 21,209 deliveries last month mark another record for Nio Inc that delivered 20,544 vehicles in May.

Factors that may have contributed to its strong performance last month include a broader rebound in the EV industry of China and tweaks the company made to its battery as a service (BaaS) offering in March.

A total of 57,373 deliveries in Q2 also marked a new record for Nio. Its previous high was 55,432 deliveries in the third quarter of 2023.

It is worth mentioning here that the EV maker had guided for 54,000 to 56,000 deliveries for its second quarter last month. Nio stock does not pay a dividend at writing but its management is committed to expanding in Europe despite recently increased tariffs .

Is Nio stock worth owning in July 2024?

Nio has now delivered well over half-a-million vehicles since its inception.

The Chinese firm is slated to begin delivering its affordable, smart electric vehicles under the Onvo sub-brand in the third quarter of 2024. The Onvo L60 will officially launch on September 10th, as per Internet Info Agency.

Nio expects its revenue to fall between RMB 16.59 ($2.28 billion) and RMB 17.14 billion in the second quarter, which suggests up to a 95% growth on a year-over-year basis. That makes “On The Pulse” more bullish about Nio stock.

Nio’s delivery upswing plus an improvement in margins paint a more positive picture. Taking into account the upward trajectory of its sales and deliveries, Nio stock could sell for 2x sales (implied stock price $8.0).

Note that Nio shares have traded at a much higher sales multiple when the market was more positive about EV companies. Therefore, rewards currently outweigh the risks in Nio stock, as per On The Pulse.

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