NIO Inc. (NIO) shares ended the week on a sour note, with its U.S.-listed American depositary receipts sliding 5.8% on Friday to close at $5.36. The decline wiped out gains from a rally earlier in the week that was fueled by a strong May delivery report, leaving the stock down 4.3% from the prior Friday's close.
The selloff came amid broader market weakness, with the Nasdaq Composite falling 4.18% and the Dow Jones Industrial Average losing 1.35% on Friday. The risk-off tone dampened enthusiasm for NIO shares, which had surged 6.79% on Monday after the company reported May deliveries of 37,705 vehicles, a 62.3% increase from the same month last year.
However, the focus has now shifted to June performance, as NIO faces a critical month to meet its second-quarter delivery guidance. The company has guided for 110,000 to 115,000 deliveries in the April-June period. With April deliveries of 29,356 and May's 37,705, NIO needs to deliver between 42,939 and 47,939 vehicles in June to hit its target range.
May's delivery breakdown showed 20,013 vehicles under the NIO brand, 12,029 from the ONVO sub-brand, and 5,663 FIREFLY models. The company also began delivering the ONVO L80 on May 16 and started handing over the ES9 flagship SUV on May 28, which could provide a boost to June numbers.
NIO's bullish narrative extends beyond just delivery volumes, focusing on scale and margin improvement. The company reported first-quarter revenue of RMB25.53 billion, more than doubling from the same period last year. Vehicle margin improved to 18.8%, up from 10.2% a year earlier, reflecting cost controls and product mix.
CEO William Bin Li described the company as being in an "intensive new product launch and delivery cycle," while CFO Stanley Yu Qu highlighted "continued improvement across all key operating metrics" and noted that NIO maintained positive adjusted operating profit, a non-GAAP metric that excludes share-based compensation and other costs.
In the competitive landscape, NIO's May deliveries outpaced those of XPeng (XPEV), which reported 32,158 units, and Li Auto (LI), which delivered 33,350 vehicles. However, market reactions varied, with XPeng shares advancing after its report while Li Auto shares declined.
Despite the delivery growth, NIO may face challenges in translating higher volumes into better pricing. Li told Reuters last month that the company remains "focused primarily on China," describing the country's car market as "a saturated market" with no further growth. This could leave NIO vulnerable if pricing pressures intensify or demand softens in its home market.
Looking ahead, traders will closely monitor the pace of June deliveries. A weak pick-up from May could put the second-quarter outlook in question, even with the recent launches of the ES9 and L80. NIO shares have experienced significant volatility this week, surging on the delivery news before giving back gains. The June delivery report will likely be a key catalyst for the stock in the coming weeks.
