Why is Nio stock falling despite revenue surge and strong EV delivery growth

Shares of Chinese electric vehicle maker Nio came under pressure after options trading reflected mixed investor sentiment and expectations for higher volatility, even as the company reported sharply higher revenue and vehicle deliveries for the first quarter.

The derivatives market reaction overshadowed otherwise strong operating results and an optimistic outlook tied to an aggressive product launch cycle in the coming months.

Nio reported first-quarter revenue of 25.53 billion yuan ($3.8 billion), more than double the level recorded a year earlier and above the top end of the company’s forecast range.

Vehicle deliveries nearly doubled year over year to 83,465 units across its Nio, Onvo, and Firefly brands.

The company posted a net loss of 496 million yuan for the quarter ended March, compared with a loss of 6.89 billion yuan a year earlier.

However, the result marked a return to losses after Nio reported its first-ever quarterly profit of 122.4 million yuan in the previous quarter.

Wall Street had expected a larger quarterly loss.

Analysts surveyed by Visible Alpha had forecast a loss of 1.12 billion yuan on revenue of 25.69 billion yuan.

Strong deliveries support revenue growth

Nio’s sales growth was driven primarily by higher vehicle deliveries and continued expansion across its multi-brand strategy.

The company’s gross margin improved to 19% during the quarter, up from 17.5% in the prior quarter and significantly higher than 7.6% a year earlier, indicating improved profitability despite the net loss.

Nio’s flagship premium SUVs continued to perform well, while its newer Onvo and Firefly brands also contributed to stronger sales momentum.

The Shanghai-based automaker has been attempting to broaden its position in China’s highly competitive EV market by targeting multiple consumer segments.

While the core Nio brand remains focused on premium electric vehicles, Onvo targets mass-market family buyers, and Firefly focuses on smaller premium EVs.

The company also benefited from recent product launches, including the Nio ES9 SUV and the Onvo L80, a five-seat sport utility vehicle launched in April.

Analysts at Citi described the pricing of the Onvo L80 as a positive surprise and estimated mature monthly sales could eventually range between 13,000 and 16,000 units.

Management issues upbeat guidance

Looking ahead, Nio projected second-quarter vehicle deliveries of between 110,000 and 115,000 units, representing year-over-year growth of 53% to 60%.

The company also forecast second-quarter revenue between 32.78 billion yuan and 34.44 billion yuan.

“Starting from the second quarter, the Company has entered an intensive new product launch and delivery cycle,” said CEO William Bin Li in a news release.

“The NIO All-New ES8 has ranked first in sales in both China's large SUV segment...This year, powered by NIO's in-house developed smart driving chip, NIO WorldModel, and the full-domain vehicle operating system, ONVO's new models will undergo comprehensive upgrades in smart technologies, continuously enhancing user experience.”

Guidance implies monthly deliveries above 40,000 vehicles in May and June combined. Nio delivered 29,356 vehicles in April alone.

Competition and volatility remain key risks

Despite improving operational trends, investor caution remains elevated as competition intensifies in China’s EV market.

Nio has faced pressure over the past year from slower demand for premium electric vehicles and broader pricing competition across the industry.

The company’s strong first-quarter growth came even as overall Chinese new vehicle sales declined roughly 7% year over year, according to data cited by Citi analyst Jeff Chung.

DBS analysts said that if Nio’s upcoming launches replicate the success of earlier models such as the ES8 and Onvo L90, the stock could experience a fresh rerating.