What happened
In just two days, Chinese electric vehicle manufacturer Nio (NYSE: NIO) is scheduled to report its first-quarter earnings-- at least, according to Nasdaq.com, it is. The company hasn't officially announced its release date yet, and other financial data providers point out that, seeing as Nio reported its Q1 earnings on May 28 in two of the past three years, it's more likely to report closer to that date this year as well.
Nevertheless, whether it will deliver its Q1 data in two days or two weeks, investors were already queuing up on Tuesday to buy shares, and as of 11:18 a.m. ET, Nio stock was up by 9.8%.
Image source: Getty Images.
So what
Is there a good reason to buy Nio stock ahead of earnings?
There may be -- but there may also not be. As my fellow Motley Fool contributor Howard Smith pointed out Monday, Nio just got an upgrade from a Bank of America analyst, who expects its sales and profit margins to improve in the second half of this year. That may not help Nio in the first half of the year, however.
Wall Street is expecting Nio to report a $0.13 per share loss in the first quarter despite also predicting that it will say its sales rose 21%. Furthermore, analysts anticipate Nio will grow its sales twice as fast in the current quarter, but still lose nearly as much money -- $0.12 per share. (For the full year, the consensus forecast is that Nio will lose $0.54 per share.)
Now what
Long story short, 2022 looks like it's going to be another money-losing year for the Chinese automaker -- its seventh straight annual loss. And according to data from S&P Global Market Intelligence, the streak is expected to last at least one more year.
The good news is that Nio's string of losses is expected to finally end in 2024, when analysts expect it to turn a profit of $0.25 per share. Of course, that still means that if you join the herd and buy Nio now, you're paying 64 times "earnings" that Nio won't actually earn for two more years ... and it may not even earn them then.
With analysts warning of skyrocketing materials costs for electric car batteries, and other car companies in China seeing their near-term output numbers crushed by COVID shutdowns, that may not be a smart bet to make.
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Bank of America is an advertising partner of The Ascent, a Motley Fool company. Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nio Inc. The Motley Fool has a disclosure policy.
The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.
