NIO stock drops after pessimistic outlook, sharp decline in gross margin offsets lower than expected loss

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Shares of NIO Inc. NIO,
+3.72%
fell 2.0% in premarket trading on Thursday, after the China-based electric vehicle maker reported a weaker-than-expected first-quarter loss and revenue that beat expectations, but strong gross margin contraction and pessimistic outlook due to volatile supply chain and vehicle delivery challenges resulting from the recent resurgence of COVID-19. Net loss narrowed to 1.27 billion RMB ($200.5 million), or 1.12 RMB per share, from 4.95 billion RMB, or 3.14 RMB per share, a year ago. a year. Excluding one-time items, the adjusted loss per share was 0.79 RMB, beating the FactSet consensus of 0.94 RMB. Total revenue rose 24.2% to RMB 9.91 billion ($1.56 billion), above the FactSet consensus of RMB 9.90 billion, with shipments hitting a record high quarterly of 25,768 vehicles. Gross margin contracted to 14.6% from 19.5%, amid lower average selling prices due to changes in product mix, increased investment in the power grid and service and rising battery costs. For the second quarter, NIO expects revenue of between 9.34 and 10.09 billion RMB, below the FactSet consensus of 11.65 billion RMB, with deliveries expected to fall between 23,000 and 25,000 vehicles. Shares of NIO fell 35.7% year-to-date through Wednesday, while ETF iShares China Large-Cap FXI,
+2.75%
slipped 7.0% and the S&P 500 SPX,
-1.08%
fell 13.7%.

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