Should You Buy Nio Stock Before June 2?

Nio (NYSE: NIO) is expected to release its fiscal 2026 first-quarter earnings report on June 2. Investors are now questioning whether the Chinese electric vehicle (EV) maker's recent turnaround signals a durable upward trajectory or merely a short-term rebound.

Here are a few factors to consider before buying Nio stock now.

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Potential turnaround story

Nio has gradually transitioned from being a high-growth, loss-making electric vehicle (EV) player to a potential turnaround story. In the fourth quarter of fiscal 2025, the company reported its first-ever quarterly profit. The company has also generated positive free cash flow for two consecutive quarters and achieved full-year positive operating cash flow in fiscal 2025.

That operational momentum appears to be continuing into fiscal 2026. Nio delivered 83,465 vehicles in the first quarter, implying 98.3% year-over-year growth. Cumulative deliveries at the end of the first quarter reached 1,081,057 vehicles. Management is also confident of achieving 40% to 50% year-over-year growth in sales volumes, supported by multiple product launches and an expanding addressable market.

Nio's vehicle gross margin was 18.1% in the fourth quarter, driven by a greater mix of premium, higher-margin models and ongoing cost optimization. This mix shift could prove to be a crucial catalyst in the coming months. Management highlighted that large SUVs (such as the ES8) are generating vehicle gross margins of close to 25%. As a result, the company's improving product mix could translate into further margin expansion with the launch of multiple large vehicle models in 2026, including the ES9 flagship SUV and the ONVO L80.

Beyond vehicles, Nio is also building a strong EV ecosystem. Its battery-swapping network included around 3,815 power swap stations and over 28,000 power chargers and destination chargers globally at the end of March. This infrastructure is not just a convenience feature but a long-term competitive advantage that enhances user experience and supports energy storage.

Nio's investments in autonomous driving and artificial intelligence (AI) are also showing results. Following the rollout of the new version of NIO World Model in late January 2026, driving time using its Smart Driving feature increased by more than 80% compared to the previous month.

Risks

However, investors cannot ignore multiple risks.

The broader Chinese EV market is showing signs of slowing growth, while an intense pricing war among EV players is eroding profitability. While Nio appears to be gaining share, management acknowledged that the overall passenger vehicle market could see a slight decline in 2026. Although battery electric vehicles (BEVs), particularly in the premium segment, continue to gain market share, competitive pressures remain high.

Additionally, while Nio has achieved its first quarterly profit, the company was loss-making for the full fiscal year 2025. The company is also experiencing increasing raw material costs, including lithium carbonate, memory chips, and other components. Although management expects these pressures to remain manageable and partially offset by a richer product mix, visibility remains limited.

Investors will be watching out for consistent growth in deliveries, improving margins and cash flows, and progress toward full-year profitability in the June 2 earnings report. Hence, retail investors who have an above-average risk appetite may consider buying a small stake in the stock ahead of June 2, since the company's profitability, growth, and product strategy are all moving in the right direction.

Manali Pradhan, CFA 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.