Nio's Stock is Surging After the Good Kind of "Profit Alert"

Shares of Chinese electric-vehicle maker Nio (NYSE: NIO) were trading higher on Friday after the company announced that it expects to report an adjusted operating profit for the fourth quarter -- its first-ever profit on that basis.

As of 1:00 p.m. ET, Nio's American depositary shares were up about 7.3% from Thursday's closing price.

Nio issued the good kind of "profit alert"

Nio said in a statement that it expects to post an adjusted operating profit of between 700 million Chinese yuan (about $100 million) and 1.2 billion yuan (about $172 million) for the fourth quarter. That would mark the first time that the EV maker has posted a quarterly operating profit on that basis.

Nio's deliveries were up almost 47% last year. Its operating result turned positive in the fourth quarter on an adjusted basis, it said. Image source: Nio.

"Adjusted" can mean a number of different things when talking about profits and losses. In Nio's case, the meaning is straightforward: Like many other companies, Nio excludes the costs of share-based employee compensation from its "adjusted" number to give investors a clearer basis when comparing quarters, or when comparing Nio's results to those of other companies.

Nio reported an adjusted operating loss of 5.54 billion yuan (about $799 million) in the fourth quarter of 2024.

Nio's deliveries appear to have crossed its break-even point

Nio's statement didn't explain precisely how it had turned an adjusted operating profit in the fourth quarter. But the company said last month that it delivered 124,807 electric vehicles in the quarter, up almost 72% from the same period in 2024. It's likely that total was enough to cross the company's break-even point -- a significant milestone for the still-young automaker.

Nio hasn't yet announced a date for its official fourth-quarter earnings report, but it's likely to happen in early March.

John Rosevear has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.