NIO’s shares slided 6% after $2 billion stock offering- PingWest

NIO’s shares slided 6% after $2 billion stock offering- PingWest

NIO’s shares slided 6% after $2 billion stock offering

September 9, 2021 6:53 pm

NIO.Inc, a Chinese smart electric vehicle company, announced on September 7 that it would sell up to $2 billion of its American depositary shares through an at-the-market equity offering program. NIO's shares dropped by 6.3% shortly after.

Details:

With policies in favor of consumers adopting electric cars, this Shanghai-based company is one of the most thriving electric car makers in China, often considered a close rival of Tesla.

Affected by semiconductor supply shortages, NIO has cut its monthly production and reduced its delivery forecast. Its ambitious $2 billion stock offering would help NIO "pay down debt and lower its interest expense by about 90%, therefore freeing up money to invest in priorities like research and its distribution network," according to Bloomberg Intelligence analyst Steve Man. 

NIO's $2 billion stock offering would be a Chinese company's biggest US equity offering since Didi.

Context:

Ever since Didi's IPO provoked a regulatory crackdown on Chinese companies listing in the US, both investors and companies have remained cautious when it comes to fundraising. 

Two other prominent Chinese electric vehicle makers are raising funds too, but they are doing it differently by listing in Hong Kong. Li Auto, an EV company, backed by Meituan, set to raise US$1.5 billion in Hong Kong IPO in August, while XPeng, backed by Alibaba, raised US$1.8 billion in June.

According to Bloomberg, NIO is also considering listing on a second exchange, citing people familiar with the matter, but there could be a delay in the process.

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