Chinese EV maker NIO (NYSE:NIO) plans to slash 10% of its staff positions and could spin off its non-core businesses, according to Bloomberg. The development comes as NIO grapples with continued losses and lower-than-expected sales.
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Reportedly, William Li, the CEO of NIO, noted that, “duplicate positions will be slashed and investments that do not contribute to the company’s performance within three years will be deferred or cut.” The company is looking to lower costs and boost efficiency amid missed sales targets and fierce competition in the Chinese EV market. Moreover, a price war in China has been bleeding the EV sector in the country for a while now.
Despite steadily rising sales and vehicle deliveries, NIO is yet to turn profitable. The company’s share price has plummeted from a high of about $63 in February 2021 to the present $8 level. In the second quarter, the company’s gross margin plummeted to 1% from 13% in the year-ago quarter.
While NIO’s plans to trim its headcount have sent its shares nearly 4% higher in the pre-market session today, all eyes will be on its third-quarter results on November 7. Analysts expect the company to incur a net loss per share of $0.36 on revenue of $2.65 billion for the quarter. In the year-ago period, NIO’s net loss per share of $0.29 had come in wider than expectations by $0.12.
Is NIO a Buy, Sell, or a Hold?
Overall, the Street has a Moderate Buy consensus rating on NIO. The average NIO price target of $14.16 implies a substantial 81.8% potential upside.
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