Morgan Stanley reiterated its ‘Overweight’ rating on Nio following the Chinese electric vehicle maker’s first-quarter results, saying “all eyes remain on Nio’s volume resurgence and cash flow.”
In a research note published on Tuesday, analyst Tim Hsiao maintained a $5.90 price target, representing a 72% upside from Nio’s current trading level of $3.43.
Total revenue rose 21% year-on-year to 12 billion yuan but fell 39% sequentially, missing the company’s prior guidance of 12.4–12.9 billion yuan, Hsiao noted.
The average selling price dipped 2% quarter-on-quarter, reflecting increased deliveries of the lower-priced Onvo L60.
Vehicle gross margin came in at 10.2%, up 1 percentage point year-on-year but down 2.9 points from the previous quarter.
Overall gross margin declined more sharply, falling 4.1 points to 7.6%, which Hsiao said was below Morgan Stanley’s 8–9% estimate, citing “inferior scale and an unfavourable product mix.”
On the cost side, operating expenses fell quarter-on-quarter, with R&D spending down 12% and SG&A down 10%, which the analyst attributed to “cost savings from restructuring efforts.”
Nio’s cash position declined 16 billion yuan quarter-on-quarter to 26 billion yuan, including restricted cash, short-term investments, and long-term deposits.
Hsiao described the figure as “marking the trough,” with expectations for improvement from the second quarter onwards amid a recovery in sales.
Looking ahead, Nio guided for second-quarter revenue of 19.5–20.1 billion yuan, implying a 62–67% sequential increase.
However, the outlook suggests a “high single-digit” ASP decline, likely due to increased discounting ahead of facelifts for the 2024 5/6 series and a rising share of Firefly-brand deliveries.
“All eyes remain on volume resurgence and cash flow,” Hsiao concluded.
Nio said it expects vehicle deliveries to range between 72,000 and 75,000 units between April and June.
Given it delivered 23,900 in April and 23,231 in May, the Shanghai-based group estimates deliveries to range between 24,869 and 27,869 EVs in June.
The result would mark the company’s highest monthly total this year, surpassing the 23,900 units delivered in April, and would be its second-best monthly sales performance to date.
