NIO Inc.'s American depositary shares suffered a sharp decline on Friday, falling 7.14% to close at $5.20. The drop erased most of the gains from the company's better-than-expected first-quarter earnings and pushed the stock to a weekly loss of approximately 15%.
The New York Stock Exchange will be closed on Monday for Memorial Day, delaying NIO's next trading session to Tuesday. That timing puts the spotlight squarely on the company's upcoming launch of the ES9 executive SUV, scheduled for May 27. The ES9 is NIO's latest entry into the premium SUV segment, a fiercely contested area in China's electric vehicle market.
NIO reported first-quarter revenue of RMB25.53 billion, a 112.2% increase year-over-year. Vehicle deliveries rose 98.3% to 83,465 units, and the vehicle margin improved to 18.8%, marking the fourth consecutive quarter of margin expansion. On a non-GAAP basis, the company posted an adjusted operating profit of RMB66.8 million, though it reported a net loss of RMB332.1 million under standard accounting.
Despite these positive headline numbers, investors appeared to focus on the sequential drop in deliveries from the previous quarter and the intensifying competitive landscape. Rivals Xpeng, BYD, and Li Auto are all launching large SUVs in the same price bracket. Reuters reported that Xpeng recently unveiled its GX full-size SUV, while BYD's Denza brand and Li Auto are also rolling out new models.
NIO CEO William Bin Li characterized the current period as an "intensive new product launch and delivery cycle." The company guided for second-quarter deliveries of 110,000 to 115,000 vehicles. CFO Stanley Yu Qu highlighted the improving margin trend and growing cash reserves.
The ES9 launch follows the recent debut of the ONVO L80, a large five-seat SUV under NIO's family-oriented brand, which began deliveries on May 15. Deutsche Bank analysts, led by Wang Bin, projected that ONVO L80 sales could reach 10,000 units per month initially before settling at around 4,000 as new competitors enter the market. They expect a similar trajectory for the upcoming ONVO L90.
Industry data from the China Passenger Car Association suggests new energy vehicle sales in May could rise 12% from April to 950,000 units, achieving a record 62.5% penetration rate for battery-electric and plug-in hybrid vehicles. However, the association cautioned that consumer sentiment remains cautious regarding big-ticket purchases, calling the recovery trend "weak."
The key risk for NIO is execution. If ES9 demand falls short of expectations, if ONVO L80 orders taper off quickly, or if costs escalate, the company's margin recovery could stall. NIO's outlook language, which noted that projections are preliminary and subject to revision, carried extra weight after Friday's sell-off.
When trading resumes on Tuesday, investors will have to weigh NIO's stronger quarter and product pipeline against the headwinds of rising competition and delivery volatility. The ES9's reception could be a decisive factor in the stock's near-term direction.
