NIO Stock Sinks Ahead of Q1 Earnings: Is This a Buying Opportunity?

China-based EV company NIO Inc. NIO is slated to release first-quarter 2025 results on June 3, before the opening bell. The Zacks Consensus Estimate for the to-be-reported quarter is pegged at a loss of 22 cents a share on revenues of $1.71 billion. 

The loss estimate for the first quarter of 2025 has widened by 9 cents a share over the past 60 days. However, the bottom-line projection indicates an improvement from a loss of 36 cents reported in the year-ago period. The Zacks Consensus Estimate for quarterly revenues suggests year-over-year growth of 24.5%.

For 2025, the Zacks Consensus Estimate for NIO’s revenues is pegged at $13.8 billion, implying a rise of 51.4% year over year. The consensus mark for the 2025 bottom line is pegged at a loss of $1.16 per share, indicating an improvement from a loss of $1.51/share incurred in 2024. In the trailing four quarters, NIO surpassed EPS estimates once and missed thrice, with the average negative earnings surprise being 11.24%.

NIO Inc. Price and EPS Surprise

NIO Inc. price-eps-surprise | NIO Inc. Quote

Q1 Earnings Whispers for NIO

Our proven model does not conclusively predict an earnings beat for NIO this season. The combination of a positive Earnings ESP and a Zacks Rank #1 (Strong Buy), 2 (Buy) or 3 (Hold) increases the odds of an earnings beat. That’s not the case here. You can uncover the best stocks to buy or sell before they’re reported with our Earnings ESP Filter.

NIO has an Earnings ESP of 0.00% and a Zacks Rank #3. You can see the complete list of today’s Zacks #1 Rank stocks here.

(Find the latest EPS estimates and surprises on Zacks Earnings Calendar.)

What’s Shaping NIO’s Q1 Results?

For the three months ended March 31, NIO delivered 42,094 vehicles, up 40.1% year over year and within its projected range of 41,000-42,000 vehicles. In late March 2025, the company commenced delivery of the NIO ET9, its smart electric executive flagship. NIO has expanded beyond its luxury lineup with the launch of a more affordable ONVO brand. In the quarter to be reported, deliveries of L60 — ONVO’s first product — totaled 14,781 units.

Revenues for the quarter to be reported are expected to have benefited from increased deliveries. However, it is likely to have been somewhat offset by pricing pressure, thanks to stiff competition in the EV landscape. Amid the volume ramp-up and cost optimization of components and supply chains, vehicle margins are on an upward trend. The metric grew from 9.2% in the first quarter of 2024 to 13.1% in the fourth quarter. Encouragingly, NIO targets a vehicle margin of around 20% for 2025.

On the flip side, NIO has been struggling with operational inefficiencies for several quarters. In the last reported quarter, SG&A expenses rose 22.8% year over year. This trend is likely to have continued due to higher personnel costs and increased spending on sales and marketing. High operating expenses may have hurt profit margins. Investments in battery swapping stations and store expansion could have further strained cash flow and overall finances.

NIO Stock Price Performance & Valuation

On a year-to-date basis, shares of NIO have declined 15.8%, underperforming the industry as well as its close peers — Li Auto LI and XPeng XPEV. While Li Auto has risen 16% so far this year, XPeng’s rally has been exceptionally remarkable thanks to its aggressive push into autonomous driving and robotics.

YTD Price Performance Comparison

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From a valuation perspective, NIO currently trades at a forward price-to-sales ratio of 0.49, well below Li Auto’s 1.1 and XPeng’s 1.4.

NIO Looks Undervalued Compared to LI & XPEV

Buy, Hold or Sell NIO Now?

NIO is making bold moves in the electric vehicle (EV) space. With a growing lineup of stylish SUVs and sedans, the company is also expanding into new segments through its ONVO and Firefly brands. Management expects vehicle sales to double in 2025 from 2024, signaling strong confidence in its demand and product strategy.

A major advantage for NIO is its battery swap technology, which offers faster refueling and convenience compared to traditional charging. The company has built over 3,200 swap stations and recently partnered with battery giant CATL to grow this network even further.

However, the road to profitability remains steep. NIO posted a massive $3 billion net loss in 2024. While management aims to break even by the fourth quarter of 2025, achieving this will be tough in China’s cut-throat EV market. Aggressive price competition is likely to hurt margins across the board.

After seven straight days of share price declines, it may be tempting to see NIO as a bargain. But this isn’t the right time to buy or sell. The company’s future depends on how well it can manage costs, hit vehicle margin targets and boost efficiency.

Current shareholders should stay patient, while new investors should wait for clearer signs of financial improvement before jumping in. NIO has strong long-term potential but the near-term outlook is clouded by market pressure and unproven profitability.

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This article originally published on Zacks Investment Research (zacks.com).

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