On Tuesday, Morgan Stanley reaffirmed its Overweight rating and $13.00 price target on NIO Inc. (NYSE: NIO) stock, following the electric vehicle maker's fourth-quarter financial results. NIO reported a net loss of Rmb5.6 billion for the fourth quarter of 2023, which was in line with Morgan Stanley's anticipated range of Rmb5.5-6 billion. The loss widened from the Rmb4.6 billion reported in the third quarter of 2023.
Despite the increased net loss, NIO's total revenue for the quarter exceeded the company's guidance, coming in at Rmb17.1 billion, a 10% decrease from the previous quarter. The revenue beat was attributed to a modest 2% quarter-on-quarter decrease in the average selling price (ASP) of its vehicles. Additionally, NIO's cash reserves saw a significant boost of Rmb12 billion following the completion of the CYVN transaction.
The company's vehicle gross margin saw a slight improvement, rising by 0.9 percentage points to 11.9% quarter-on-quarter, largely due to reduced battery costs. However, this figure fell short of Morgan Stanley's estimate range of 12-13% and NIO's own target of 15%. The lower margin was impacted by several one-off factors, including inventory provisions, accelerated depreciation on production facilities, and losses from purchase commitments for older models such as the ES8, ES6, and EC6.
Operating expenses showed an increase, with research and development (R&D) and selling, general, and administrative (SG&A) expenses rising 31% and 10% quarter-on-quarter to Rmb4 billion respectively. This increase was partially offset by a higher non-operating gain, which included interest and investment income totaling Rmb1.4 billion.
Looking ahead to the first quarter of 2024, NIO has provided guidance for vehicle deliveries in the range of 31,000 to 33,000 units, which represents a decrease of 34-38% from the previous quarter. This guidance slightly exceeds Morgan Stanley's prior expectations of 30,000 to 32,000 units and suggests a monthly run-rate of 13,000 to 15,000 units for March. The company's revenue guidance for the first quarter stands at Rmb10.5-11 billion, indicating a further 1% decline in ASP compared to the fourth quarter of 2023.
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