NIO Inc.'s American depositary receipts traded lower in Friday's early premarket session, defying a strong first-quarter earnings report that featured a sharp revenue increase and an upbeat delivery forecast. The Chinese electric vehicle maker's shares fell 5.5% to $5.29 as of 6:03 a.m. EDT, down from Thursday's close of $5.60, according to MarketScreener data. Regular trading on the New York Stock Exchange had not yet begun.
The stock's decline comes as investors remain cautious about NIO's ability to sustain profitability in an increasingly competitive Chinese EV market. The company reported first-quarter revenue of RMB25.53 billion, or $3.70 billion, up 112.2% year over year. Vehicle deliveries nearly doubled to 83,465 units, including 58,543 from the NIO brand, 13,339 ONVO vehicles, and 11,583 FIREFLY models. Vehicle margin improved to 18.8% from 10.2% a year earlier.
On a GAAP basis, NIO posted a net loss of RMB332.1 million, or $48.1 million. However, on a non-GAAP basis, which excludes share-based compensation and other items, the company reported an adjusted net profit of RMB43.5 million. This marks a notable turnaround from prior quarters, though the underlying profit remains thin.
Looking ahead, NIO expects second-quarter deliveries of 110,000 to 115,000 vehicles, with revenue projected at RMB32.78 billion to RMB34.44 billion, or $4.75 billion to $4.99 billion. That would represent year-over-year growth of 72.4% to 81.2%. The company is also launching the ES9 flagship executive SUV on May 27, while its ONVO brand began deliveries of the L80 on May 15.
Despite these positive developments, margin pressure looms large. CFO Stanley Yu Qu told analysts that rising costs for memory chips, lithium carbonate, nickel-cobalt-manganese battery materials, copper, and aluminum will increase NIO's average cost per vehicle by more than RMB10,000. He guided for vehicle margin of about 17% to 18% for the second quarter and full year. NIO plans to offset these costs through higher-margin ES8 and ES9 models, steady pricing, and supplier negotiations.
The competitive landscape is intensifying. Xpeng recently launched a high-end full-size SUV with a temporary discount, targeting the same premium segment where BYD, Li Auto, and NIO are vying for buyers. Jefferies nudged its NIO price target up to HK$47.60 from HK$47.50 but maintained a Hold rating, reflecting cautious optimism.
Friday's early trading suggests that traders are not convinced the road ahead will be smooth. If demand for the ES9 and ONVO models falls short, or if input costs remain elevated, NIO may face a difficult choice between protecting margins and sacrificing market share.
