Why NIO Stock Is Down Today

A planned $2.8 billion elevate has investors wary.

What took place

NIO‘s (NYSE:NIO) stock opened lower on Friday, after the Chinese language electrical-automobile maker said that this is able to merely narrate at the least 60 million shares in a brand novel offering next week.

As of 10: 30 a.m. EST, NIO’s American depositary shares were down about 4.9% from Thursday’s closing impress.

So what

NIO said that this is able to merely promote as a lot as 69 million novel American depositary shares, raising as mighty as $2.8 billion, in an offering that is anticipated to hit the market next week. The firm plans to utilize the novel cash for a unfold of corporate functions, including novel-product pattern, the attain of self-riding applied sciences, and to elongate its sales and restore network.

A NIO ES8 electric SUV is shown inside an automated battery-swap station.

NIO will seemingly spend one of the necessary crucial cash it raises to elongate its network of computerized battery-swap stations. Image supply: NIO.

NIO positively plans to promote 60 million shares. Its underwriters, including Morgan Stanley, have the superb to make a decision an further 9 million shares within 30 days. 

NIO’s offering follows the same secondary stock choices from rivals including Tesla, which offered a $5 billion elevate earlier this week; Li Auto, which raised about $1.3 billion closing week; and XPeng, which offered a $2.2 billion stock sale on Wednesday. 

NIO’s stock seemingly traded lower following the facts due to investor concerns in regards to the dilutive originate of 60 million (or presumably more) novel shares. 

Now what

Auto investors ought to make certain about this: NIO — cherish its rivals — will not be in truth in urgent need of cash. That is a very assorted project from earlier this yr, when NIO urgently sought further Investment at a second when it modified into shut to going broke. 

The firm is now in staunch financial shape, with or with out this further $2.8 billion, nonetheless the pondering — and I feel it is inviting pondering — could perchance be that it is no longer a substandard opinion to elevate some further cash at a time when investors are snapping up electrical-automobile shares. 

The offering is anticipated to impress on Monday.


John Rosevear has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Tesla. The Motley Fool has a disclosure policy.”>

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