NIO Inc. (NIO) Trades Down Following Announced Offering

Shares in the electric carmaker, Nio Inc. (NYSE: NIO), dropped as much as 6.3% Wednesday after it announced plans to sell up to $2 billion of American depositary shares, which would boost its cash holdings amid supply-chain disruptions and ahead of its planned Hong Kong listing.

If completed, Nio’s deal would be the biggest U.S. equity offering by a Chinese firm since Didi (NYSE: DIDI). U.S. stock sales by companies based in China have waned since the regulatory crackdowns that followed Didi’s debut.

People familiar with the matter told Bloomberg in March that Nio was also considering listing on a second exchange, but this week’s offering could signal a lack of progress.

“We think this could reflect further delays in the Hong Kong listing process,” Deutsche Bank analyst Edison Yu wrote in a note.

According to Bloomberg Intelligence analyst Steve Man, proceeds from any sales under the new plan can help Nio pay down debt and lower its interest expense by about 90%. The lowered expenses could free up money to invest in priorities like research and its distribution network.

Man does not see the offering signaling any trouble for the EV company’s Hong Kong plans. “The Hong Kong IPO is less about money-raising, but more about listing in greater China,” he said.

By Michael Elkins | [email protected]

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