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Nio shares soar after second-quarter earnings report beats estimates

Yahoo Finance Video

Yahoo Finance's Ines Ferre joins The First Trade with Alexis Christoforous and Brian Sozzi to discuss Nio's latest earnings report and the stock's reaction.

Video Transcript

BRIAN SOZZI: Let's hit up one of those Yahoo Finance trending tickers, Nio. Ines, this stock is constantly trending on the Yahoo Finance site every single today, but at least today, there's a good reason for it.

INES FERRE: That's right. It's been on fire. Year to date, the stock is up 242%. A lot of the action that we've seen in this stock has been in the last couple of months, beating on the top and the bottom line. The electric-car maker in China for its latest quarter posting a narrow loss per share and also record-high quarterly deliveries. The ES6 and the ES8-- that's a five-seat midsized SUV and also the seven-seat midsized SUV-- very popular for the quarter. Vehicle sales increased 177% year over year.

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On an adjusted basis, the company's loss per share decreased by 65% year over year, and Nio highlighted a high vehicle gross margin of 9.7% compared to a negative 24.1% for the same quarter last year and a positive cash flow from operations for the first time in the company's history.

It's been a rocky start since the beginning. Back in 2018, this company went public on the New York Stock Exchange. It's very difficult to have an electric-vehicle company to come up with prototypes. A lot of capital investment into manufacturing these vehicles. It's been losing money, but it's inching closer and closer to profitability, and that's what investors are really looking for.

It's been benefiting from capital flowing into the electric-vehicle space. It had capital injections over the last several months. It's gone through cost cutting. And most importantly from the earnings announcement that it had today, it is forecasting that its delivery outlook for-- it's raising its forecast for its delivery outlook for the third quarter, the current quarter, and also raising its revenue outlook as well. Very important for investors.

Nio has-- today, right now, it's down more than 2%, but this stock has really been rallying over the last year.