Troubles Mount for China’s NIO as Analysts Flag Weak Sales, Dwindling Cash
Troubles Mount for China’s NIO as Analysts Flag Weak Sales, Dwindling Cash
(Bloomberg) -- A nightmarish week for NIO Inc. investors got worse on Thursday, as at least two more analysts downgraded the Chinese electric-car maker, citing a weak sales outlook, high cash burn and a lack of clarity around financing.
U.S.-listed shares of NIO have now fallen for five straight days, down 37% since their Sept. 19 close. The stock dropped as much as 7.3% on Thursday, touching a new all-time low of $1.90.
Earlier this week, NIO reported a worse-than-expected quarterly loss, and said it would cut jobs and restructure some businesses, including spinning off some units, amid growing concerns about its financial situation. Sanford C. Bernstein analyst Robin Zhu estimated in a note that the company may have only a few weeks of liquidity left.
During an earnings call that was first canceled and then rescheduled for Wednesday, NIO failed to ease investors’ fears about its cash position.
“Since first-quarter results, the main question has been whether meaningful equity financing from a non-institutional investor would be executed,” Wolfe Research analyst Dan Galves wrote in a note. The lack of any such announcement, “despite what we assume was a delay in reporting second-quarter earnings in anticipation of an agreement, is concerning,” he said.
Galves downgraded NIO to the equivalent of a hold from a buy. Morgan Stanley also cut its rating on the stock.
A contrary view came from Citi’s Jeff Chung, who maintained his buy rating, citing an expectation of a strong recovery in new-energy vehicles in 2020 that should benefit NIO.
To contact the reporter on this story: Esha Dey in New York at edey@bloomberg.net
To contact the editors responsible for this story: Brad Olesen at bolesen3@bloomberg.net, Morwenna Coniam, Scott Schnipper
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