Nio Stock Up Ahead Of Earnings; Tesla Stock Pops With China Sales Expected To Improve In May

China-based electric-vehicle maker Nio (NIO) will report first-quarter earnings early Thursday, as Covid factory shutdowns end and the company once again turns its focus to supply-chain challenges. Meanwhile, Tesla (TSLA) China sales numbers are also likely to come out in the coming days. Nio and Tesla stock rose.

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Nio already reported deliveries of 25,768 vehicles in the first quarter, a 28% year-over-year increase and a 3% increase from Q4 last year. 

The company delivered 7,024 vehicles in May, up 38% vs. April and nearly 5% higher vs. a year earlier. In April, sales plunged nearly 50% on a month-over-month basis to 5,074, down 29% vs. April 2021. NIO also delivered 1,707 of its premium electric sedan ET7 vehicles in May, just shy of its 2,000 target.

Deutsche Bank analyst Edison Yu said in a June 6 report to investors that he expects a “mostly in-line quarter with investor attention to be focused on the 2Q outlook (we forecast 24,000 deliveries) and commentary around the supply chain post COVID lockdowns.”

With Shanghai opening up last week, Yu says Nio can finally get back on track with its product supercycle this year. “In fact, Nio has delivered 101 vehicles already in the city since (June 2), even before starting ET7 deliveries,” he wrote.

Overall, Deutsche Bank reduced its 2022 deliveries forecast by 10,000 to 160,000 vehicles, while maintaining its 2023 estimate for 320,000 or a doubling year over year.

Vehicle production in May “had been gradually recovering from the impact of Covid-19 outbreaks in certain regions in China, while vehicle deliveries were still constrained to a certain extent,” Nio said in a statement. 

Management said it plans to further ramp up production by working closely with supply-chain partners. Meanwhile, a local report said Nio operations have now returned to pre-lockdown levels. The company is also opening up Nio stores in Shanghai, its largest market.

Tesla China Sales Coming

Nio’s main rival in China, Tesla, likely saw its China production and sales rebound in May after its Shanghai plant was shut down from March 28 to April 18.

Tesla delivered just 1,512 vehicles from its Shanghai factory during April. That’s well below its typical production of around 60,000 a month. During the lockdown, Tesla created a closed-loop setting in which workers lived at the plant to maintain some production. But investors should still expect lower-than-usual deliveries for May, too. 

Tesla supply-chain issues persist as well. A local report cites a BYD (BYDDF) executive confirming that it will supply batteries to Tesla.

Shanghai’s nearly two-month lockdown brought production to a virtual halt, but government subsidies are expected to bolster car sales in China for the second half of 2022.

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Nio Earnings

Estimates: Wall Street expects Nio to post a 14-cents-a-share loss in Q1 vs. a 4-cent loss in the year-ago period. Sales are seen coming in at $1.512 billion, a 23% increase from the year-ago period, according to FactSet.

Results: Check back tomorrow.

Nio Stock, Tesla Stock

Nio shares rose 3.6% to $20.35 on the stock market today. The stock climbed back above its 50-day line in recent days, gaining nearly 50% in the last month, according to MarketSmith.

NIO stock is still well off its 52-week high of 55.13, but its relative strength line is ticking back up again.

Tesla shares added 1.3% to 725.60. TSLA stock is in a long consolidation with a 1,208.10 buy point. Shares are trading below their declining 50-day line.

Among other China-based EV makers, Xpeng (XPEV) jumped 5.4%, while Li Auto (LI) edged up 0.8%. BYD gained 2.4% and is working on a cup-base buy point of 41.34. Its RS line hit a new high Wednesday.

Follow Adelia Cellini Linecker on Twitter @IBD_Adelia.

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