Nov 22, 2023

NIO shares are weak as the automaker gets set to deliver its latest earnings.

nio-chart

NIO – Daily Chart

The price of NIO trades around 7.48 on the US market, and support is nearby at 7.15. The shares need a positive earnings spin to mount a rally.

On Tuesday, Shanghai-based NIO announced a new partnership with state-owned Changan Automobile to build electric vehicles with battery-swapping technology. The two companies are also seeking to design joint standards for battery technology. The partnership aims to boost NIO’s profitability amid the growing competition in the sector.

NIO will report its Q3 financial results on December 5. The consensus expectation is for revenue of $2.66B and EPS of -$0.36.

NIO launched additional lower-priced vehicles earlier in the year, reducing average selling price and margins. But with no new launches planned for 2023, the company expects profit margins to bounce back as production scales on existing models.

Since receiving an investment from the Abu Dhabi government in June, NIO has sought to build positive sentiment and improve its fiscal position. Monthly delivery volumes have returned to growth in Q3 and Q4 after declining at the start of the year. NIO also raised $1 billion through a convertible bond issuance, which avoids financial pressure and adds further funds for the company’s expansion plans. There has also been a commitment to a cost-cutting program.

NIO said its cost reduction efforts would include laying off around 10% of its workforce. The company added that it would target non-performing teams and projects that have failed to meet internal targets, leading to improved future execution.

With those developments, an earnings surprise could see a rally in NIO over the near term.

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