NIO Rout Worsens as Carmaker Fails to Allay Cash-Crunch Concerns
NIO Rout Worsens as Carmaker Fails to Allay Cash-Crunch Concerns
(Bloomberg) -- Shares of NIO Inc. plunged to record lows for a second consecutive day after the Chinese electric-vehicle maker failed to assuage fears that it’s running short on cash.
The company is aggressively expanding its sales efforts and taking comprehensive measures to reduce costs, Chief Executive Officer William Li said on an earnings call, which was canceled a day earlier and then rescheduled. While Chief Financial Officer Louis Xie alluded to “significant progress” NIO has made with securing funding from certain parties, he didn’t offer specifics.
NIO’s U.S.-listed stock fell as much as 6.9% to $2.02 on Wednesday. The shares have plummeted more than 30% this week as the automaker plagued by cost overruns, vehicle recalls and a pullback in state subsidies for electric-car purchases posted a worse-than-expected loss.
“If a company’s liquidity is measured in weeks, it is definitely very dangerous,” Robin Zhu, an analyst at Sanford C. Bernstein, said by phone. NIO may need to seek government support, which will be difficult to get, he said.
The company backed by Chinese technology giant Tencent Holdings Ltd. plans to slash its workforce to 7,800 by the end of this month, from more than 9,900 at the start of the year. It’s also raising $200 million from Li and a Tencent affiliate and planning to spin off some non-core businesses by the year-end.
To contact Bloomberg News staff for this story: Chunying Zhang in Shanghai at czhang714@bloomberg.net;Will Davies in Hong Kong at wdavies13@bloomberg.net
To contact the editors responsible for this story: Young-Sam Cho at ycho2@bloomberg.net, Craig Trudell, David Welch
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