TLDR
- NIO Inc announced a $1 billion equity offering of 181.8 million Class A ordinary shares priced at $5.57 per ADS, an 11% discount to Tuesday’s close
- The stock dropped over 10% following the announcement, with American depositary shares closing September 11 and ordinary shares closing September 17
- Proceeds will fund research and development, battery swapping network expansion, and strengthen the balance sheet
- The company reported Q2 revenues of $2.66 billion, missing analyst estimates, with a net loss of $4.99 billion
- NIO expects Q3 vehicle deliveries between 87,000-91,000 units, up 40.7%-47.1% year-over-year
NIO Inc shares tumbled over 10% in Wednesday trading after the Chinese electric vehicle manufacturer announced plans for a substantial equity offering. The company revealed it would raise $1 billion through the sale of 181.8 million Class A ordinary shares.
The offering consists of two parts. American depositary shares will be priced at $5.57 per ADS, representing an 11% discount to Tuesday’s closing price.
Class A ordinary shares are being offered at HK$43.36 per share. The ADS offering is expected to close on September 11, while the ordinary share offering will close around September 17.
The Shanghai-based automaker plans to use the funds for multiple strategic purposes. Research and development of core technologies for smart electric vehicles tops the list. The company also aims to develop future technology platforms and vehicle models across its brands.
Infrastructure expansion remains a priority for NIO. The proceeds will help expand the company’s battery swapping and charging network. The funds will also strengthen the company’s balance sheet and support general corporate purposes.
Morgan Stanley Asia Limited, UBS Securities LLC, UBS AG Hong Kong Branch, and Deutsche Bank AG serve as underwriters for the proposed offering. The underwriters have been granted a 30-day option to purchase up to 27 million additional depositary receipts.
Recent Financial Performance
The equity offering comes after NIO reported mixed second-quarter results. Total revenues reached RMB19.01 billion ($2.66 billion), falling short of analyst estimates of RMB19.74 billion. The company posted a net loss of RMB4.99 billion for the quarter.
The loss represented a 1% decrease compared to the same period in 2024. NIO has been working to improve its financial position while investing in growth initiatives.
Third Quarter Outlook
Looking ahead, NIO provided optimistic guidance for the third quarter. The company expects to deliver between 87,000 and 91,000 vehicles during the period. This represents a growth rate of 40.7% to 47.1% compared to the third quarter of 2024.
The delivery increase is driven by new vehicle models entering the market. The Onvo L90 officially launched on July 31, generating strong initial interest. The new NIO ES8 was unveiled last month and is available for pre-orders.
CEO William Li expressed confidence in market demand during a post-earnings call. He noted that demand for the new vehicles exceeded the company’s pre-launch expectations. User deliveries of the ES8 are expected to begin in late September.
Total revenue for the third quarter is projected between RMB21.81 billion and RMB22.88 billion. This guidance suggests continued growth momentum despite current market challenges.
Market sentiment around NIO stock has remained cautious. On Stocktwits, retail sentiment stayed in bearish territory over the past 24 hours. Message volume remained at low levels during the same period.
Despite recent volatility, NIO stock has gained 29% year-to-date. Over the past 12 months, shares have risen approximately 3%. The equity offering represents the company’s latest effort to secure funding for its expansion plans while navigating a competitive electric vehicle market.
