To The Moon

$NIO$ $NIO-SW (09866)$ $NIO (NIO.SI)$

If we only look at the annual profit statement, NIO's financial report is not easy. In 2025, the company's annual net loss was 14.94 billion yuan, and the net loss attributable to common stock shareowners was 15.57 billion yuan. However, if we only look at the data for the fourth quarter, the operating profit turned positive to 807 million yuan, achieving quarterly profitability for the first time. On the first U.S. stock trading day after the release of the financial report, NIO's stock price rose by more than 15%. This indicates that the market has recognized that NIO's operations have undergone a qualitative change in the fourth quarter and has begun to price it.

For mature companies, the market places greater emphasis on absolute profit; however, for companies still in the stages of scale expansion and business model validation, the market often places more importance on marginal changes. The reason why NIO was able to be chased by capital against the backdrop of "still incurring a loss of 15 billion yuan for the whole year" is not because losses suddenly became unimportant, but because three signals that the market had been waiting for simultaneously emerged in the fourth quarter: the first appearance of a profit inflection point, simultaneous improvement in gross profit and expense structure, and strong growth guidance for the next quarter. In other words, this stock price reaction reflects the market's anticipation of NIO entering a new business stage.

Performance Improvement: Profit Inflection Point Appears for the First Time

Let's first look at the most intuitive changes. NIO has finally crossed the profitability line on a quarterly basis. In the fourth quarter of 2025, the company delivered 124,800 vehicles, with a year-on-year increase of 71.7% and a further increase of 43.3% compared to the third quarter; total quarterly revenue reached 34.65 billion yuan, with a year-on-year increase of 75.9% and a quarter-on-quarter increase of 59.0%. More crucially, while revenue and deliveries both expanded simultaneously, NIO's operating profit in the fourth quarter turned positive to 807 million yuan, adjusted operating profit reached 1.251 billion yuan, and net profit also turned positive to 283 million yuan.This is not just an improvement in a single subject, but an upward trend across the metrics of delivery, revenue, gross profit, and profit all together.

There is also a very important but easily overlooked detail behind this: the improvement in the fourth quarter was not solely driven by a single brand. According to the company's disclosure, among the 124,800 units delivered, the NIO main brand delivered 67,400 units, ONVO delivered 38,300 units, and FIREFLY delivered 19,100 units, with all three brands setting new quarterly delivery records. That is to say, this inflection point was not achieved by a short-term sales surge of a single hit model, but rather seems to be the result of the combined growth of multiple brands. For the market, compared with the accidental explosion of a single product, this trend of multiple brands growing together makes it easier for people to believe that the inflection point comes from the expansion of platform capabilities rather than short-term factor disturbances.

From the perspective of per-vehicle revenue, vehicle sales revenue in the fourth quarter was 31.61 billion yuan, corresponding to 124,800 vehicle deliveries. Calculated roughly on a simple basis, per-vehicle sales revenue was approximately 253,000 yuan; compared to approximately 221,000 yuan in the third quarter, it increased by nearly 15%, and was also higher than approximately 240,000 yuan in the fourth quarter of 2024. The company also directly stated in its financial report that the growth in vehicle sales revenue not only came from the increase in delivery volume but also from the increase in the average selling price brought about by a more favorable product mix. For a new energy vehicle enterprise that has long been shrouded in the shadow of price wars, being able to increase the revenue per vehicle while achieving quarterly volume growth is more important than simply selling more vehicles, because it means that scale expansion has not come at the expense of price and structure.

Profit quality: Gross profit and expense structure improved synchronously

If turning a profit merely allows the market to see the outcome, then what truly makes the market willing to believe in this outcome is that the structure behind the profit is also improving simultaneously. In the fourth quarter, NIO's comprehensive gross profit margin reached 17.5%, up 5.8 percentage points from 11.7% in the same period of 2024 and 3.6 percentage points from 13.9% in the third quarter; the vehicle gross profit margin reached 18.1%, up 5 percentage points from 13.1% in the same period of the previous year and 3.4 percentage points from 14.7% in the third quarter. More directly, gross profit in the fourth quarter reached 6.07 billion yuan, a year-on-year increase of 163.1%, while the cost growth rate was only 64.3%, significantly lower than the revenue growth rate of 75.9%. This indicates that the improvement in profit is not just a superficial change in the income statement figures, but rather a substantial optimization of the relationship between revenue and cost. More notably, the company's explanation for the improvement in gross profit margin is also very clear, mainly stemming from stronger delivery and revenue growth, a more optimized product mix, and the continuous advancement of cost reduction and efficiency improvement. The company's CFO also specifically mentioned that the gross profit margin of other sales in the fourth quarter also reached 11.9%. This means that improvements do not solely come from vehicle sales themselves; non-vehicle revenue such as after-sales service, parts, and technology R&D services is also becoming more contributory. Other sales revenue in the fourth quarter was 3.044 billion yuan, with a year-on-year increase of 36.6%; annual other sales revenue was 10.60 billion yuan, with a year-on-year increase of 41.4%. For an automaker with a continuously expanding user base, the increase in this type of revenue often means that the profit structure is gradually shifting from simply relying on vehicle sales to being jointly supported by vehicle sales and service ecosystems.

The changes on the cost side are also one of the most solid parts of this earnings report. In the fourth quarter, R&D expenses were 2.026 billion yuan, down 44.3% year-on-year and 15.3% quarter-on-quarter; selling, general and administrative expenses were 3.537 billion yuan, down 27.5% year-on-year and 15.5% quarter-on-quarter. The explanation provided by management is also very clear: on the one hand, personnel and related costs have decreased after organizational optimization; on the other hand, new products and technologies are at different stages of development, resulting in a decline in design and development expenditures, and at the same time, sales and marketing activity expenses are also decreasing. In other words, NIO's profit improvement this time was not achieved by cutting necessary investments, but by tightening organizational efficiency and cost efficiency while continuing to launch new models and invest in core technologies. If we look at these figures together, it will be more intuitive. In the fourth quarter, R&D expenses plus sales and administrative expenses totaled 5.563 billion yuan, accounting for approximately 16.1% of revenue. That's why the significance of the profit turning positive in the fourth quarter is not just that the bottom line of the income statement has turned from negative to positive, but also that operating leverage has finally begun to be released. Over the past few years, the market's greatest concern has been whether NIO would still need to rely on higher R&D, channel, and marketing costs to support each additional vehicle sold; however, this earnings report shows for the first time that revenue growth has begun to significantly outpace expense growth, and even cost growth. For Capital Markets, this is often more important than making a few hundred million in a single quarter.

Another point that cannot be overlooked is the cash safety cushion. By the end of 2025, NIO's total cash, cash equivalents, restricted cash, short-term investments, and long-term time deposits amounted to 45.9 billion yuan. The company also clearly stated in its financial report that, considering factors such as existing cash, improved operating cash flow, working capital management, and bank credit, it is sufficient to support its continuous operation over the next twelve months.For a company that has long been repeatedly questioned by the market about whether it will continue to seek financing and how great its cash pressure really is, this set of statements, while not indicating that the problems have been completely resolved, at least shows that this profit inflection point is not built on a fragile foundation of highly strained liquidity.

Future Expectations: Strong Guidance Drives Market to Revise Expectations Upward

NIO's guidance for the first quarter of 2026 is quite strong: it is expected to deliver 80,000 to 83,000 vehicles, with a year-on-year increase of 90.1% to 97.2%; revenue is expected to be between 24.482 billion yuan and 25.176 billion yuan, with a year-on-year increase of 103.4% to 109.2%. In the new energy vehicle industry, single-quarter profitability can sometimes be interpreted as a cyclical fluctuation, but if management still provides a growth forecast close to doubling in the following quarter, the market will more easily understand the fourth quarter as the starting point of a new stage, rather than an accidental outperformance.

Moreover, this guidance is not completely out of touch with reality. The company has already disclosed that it delivered 27,182 and 20,797 vehicles respectively in the first two months of 2026, totaling 47,979 vehicles. Based on the guidance of 80,000 to 83,000 vehicles for the first quarter, approximately 32,021 to 35,021 vehicles still need to be delivered in March, which is equivalent to an increase of 17.8% to 28.8% compared to January and 53.9% to 68.4% compared to February. This target is certainly not low, but it is not an unrealistic figure; rather, it is a continued push for growth based on the nearly 48,000 vehicles already delivered in the first two months.

From a valuation logic perspective, this is very crucial. The reason the market is willing to immediately drive up the stock price after the earnings report is not because the loss figure for 2025 suddenly becomes unimportant, but because it has started to revise upward the profit curve for 2026. Looking deeper, what Capital Markets have revised this time is not just the next quarter's earnings forecast, but the understanding of NIO's long-term narrative. In the past few years, NIO has often been examined within a framework of high investment, high growth expectations, but with profits that have been slow to materialize; and this earnings report has for the first time allowed the market to see that the problem it faces may no longer be whether it can make money, but whether it can sustain profitability once it does.For valuation, the difference between the two is very significant.

So, returning to the original question: Why did NIO, which incurred a full-year loss of 15 billion yuan, still manage to rise by over 15% after its earnings report? The simultaneous turn positive of operating profit and net profit in the fourth quarter indicates that the inflection point of profitability has indeed emerged; the simultaneous improvement in gross margin, revenue per vehicle, other sales, and expense structure shows that this inflection point is not just a short-lived turn positive on paper, but one supported by the quality of operations; the continued high-growth guidance provided for the first quarter gives the market reason to extend this change to the following quarters for understanding. The combination of these three factors constitutes the real fundamental basis for this significant stock price increase. Of course, this does not mean that NIO has completely turned the corner.This financial report does not provide the final answer to the market, but rather a first-stage proof that is sufficiently close to the answer.