Shanghai, China – NIO Inc., a leading electric vehicle manufacturer, has shown significant improvement in its delivery numbers for the month of May. With a total of 20,544 vehicles shipped, NIO has surpassed its past performance, which saw monthly deliveries drop below 10,000 just three months ago.

The positive delivery numbers in May coincide with the release of NIO’s first quarter earnings, revealing a notable improvement in margins. However, despite these encouraging signs, the company still faces challenges in achieving total profitability, impacting its stock performance.

NIO’s recent delivery upswing and margin improvement paint a more optimistic picture than what the market currently reflects. The company’s low sales multiple suggests a high margin of safety, indicating that there may be room for further growth and valuation appreciation in the future.

Despite the positive trajectory in deliveries and margins, NIO continues to struggle with profitability. In the first quarter of 2024, the company reported a significant loss, highlighting the ongoing financial challenges it faces. This loss could potentially impede further stock re-rating and hinder NIO’s ability to attract more investors.

NIO’s introduction of Onvo, a new low-price electric vehicle brand, aims to compete with Tesla’s dominance in the Chinese market. However, some analysts remain cautious about the impact of a low-price brand on NIO’s margins, especially considering the company’s current financial situation.

The comparison of sales multiples among electric vehicle companies reveals a challenging landscape in the industry. NIO, Xpeng, and Rivian have all experienced significant declines in valuation, reflecting broader concerns about moderating demand and pricing pressures in the EV market.

Investors interested in NIO and other EV companies should closely monitor profitability trends and vehicle margins, as these factors play a crucial role in determining stock performance. Any weaknesses in these areas could lead to further compression of stock multiples.

In conclusion, NIO’s business presents a mixed outlook, with positive momentum in deliveries and margins offset by lingering profitability issues and the introduction of the Onvo brand. The company’s current valuation suggests potential for future growth and presents a compelling value proposition for investors.