NIO earnings preview: Can “The Tesla of China” stem the EV bloodbath?
Matt Weller, CFA, CMT February 26, 2021 4:31 PM
The world’s second-largest all-EV manufacturer NIO (“The Tesla of China”) reports its Q4 earnings early next week
With EV bellwether Tesla Motors (TSLA) seeing deepest pullback in nearly six months, the market’s confidence in smaller electric automakers is understandably wobbling. The confluence of rising interest rates, surging commodity prices, and increased competition from well-capitalized legacy automakers has taken the previously high-flying sector into its own bear market over the last three weeks.
Against that backdrop, the world’s second-largest all-EV manufacturer NIO (“The Tesla of China”) reports its Q4 earnings early next week – here’s what traders need to know ahead of the highly-anticipated release:
When are NIO earnings?
Monday, 1 March after the closing bell
NIO earnings expectations
-$0.14 in EPS on $742M in revenues in Q4
NIO earnings: What to watch
Last quarter, NIO reported a smaller-than-anticipated loss on larger-than-expected vehicle deliveries, and traders will be looking for continued growth in capacity this quarter. The firm has seen increasing demand for its ES6 and ES8 models, but the key factor to watch will be an update on its EC6 model, a coupe-style electric vehicle that may be more accessible to the mass market.
In addition, traders will be keen for updates on NIO’s battery swap technology. The technology allows owners to save time on recharging and aims to alleviate “range anxiety,” one of the biggest factors limiting growth for the industry overall. The company has also been active in the much-hyped autonomous driving revolution, so any news on that front could stoke animal spirits as well. Finally, management will need to communicate a plan to control the recent sharp rise in SG&A (selling, general, and administrative) and R&D (research and development) costs to preserve NIO’s operating margins.
See our piece on the top EV stocks and everything you need to know about this fast-growing industry here!
NIO technical analysis
Turning our attention to the chart, NIO is currently trading down -33% from its 11 January record closing high, its steepest drop since the stock’s massive rally kicked off in Q2 2020. As we go to press, shares are testing the 100-day EMA and the shorter-term 21-day EMA is at risk of crossing below the 50-day EMA, signaling a potential shift to a near-term downtrend:
Source: TradingView, StoneX
If Monday’s earnings report fails to meet expectations, NIO could definitively break below its 100-day EMA and drop to test its December low near $38. On the other hand, a blowout quarter could reinvigorate the strong bullish trend from the last year, potentially opening the door for a re-test of the all-time record high near $65.
Either way, the earnings report promises to be a major catalyst for one of 2021’s most-popular stocks!
Learn more about equity trading opportunities.
Disclaimer: The information on this web site is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement. The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient. Any references to historical price movements or levels is informational based on our analysis and we do not represent or warranty that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, author does not guarantee its accuracy or completeness, nor does author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.
Futures, Options on Futures, Foreign Exchange and other leveraged products involves significant risk of loss and is not suitable for all investors. Losses can exceed your deposits. Increasing leverage increases risk. Spot Gold and Silver contracts are not subject to regulation under the U.S. Commodity Exchange Act. Contracts for Difference (CFDs) are not available for US residents. Before deciding to trade forex and commodity futures, you should carefully consider your financial objectives, level of experience and risk appetite. Any opinions, news, research, analyses, prices or other information contained herein is intended as general information about the subject matter covered and is provided with the understanding that we do not provide any investment, legal, or tax advice. You should consult with appropriate counsel or other advisors on all investment, legal, or tax matters. References to Forex.com or GAIN Capital refer to GAIN Capital Holdings Inc. and its subsidiaries. Please read Characteristics and Risks of Standardized Options.