Nio discredits report that it’s considering a capital raise

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Written on Sep 25, 2023

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Nio denies a report that said it will raise up to $3 billion.
Bank of America recently reiterated its buy call on Nio.
Nio stock is currently down about 45% versus its YTD high.

Shares of Nio Inc (NYSE: NIO) are recovering at writing after the EV startup discredited a report that said it was considering a capital raise.

Nio is yet to be free cash flow positive

The electric vehicles company opened 6.0% down this morning following a Bloomberg report that it will raise up to $3.0 billion in new capital – responding to which Nio said in a statement:

Nio would like to clarify that the Company currently has no reportable capital raising activity, other than the recent convertible notes offering that was completed on September 25^th, 2023.

Still, shares remain in the red today suggesting that investors are worried, nonetheless.

Why? Perhaps because Nio Inc is currently burning $250 million a quarter – a figure that Wall Street expects to still be at about $125 million by 2025.

Is it worth investing in Nio stock?

Interestingly, today’s weakness in shares of Nio Inc may just be an opportunity to buy considering the Bank of America recently reiterated its super constructive view on the New York listed firm.

Ming-Hsun Lee has a $16 price target on the EV company which signals close to a 100% upside from here.

He was particularly uplifted after Nio said last month that its deliveries more than doubled to 20,500 units on a year-over-year basis in July. The Chinese firm has recently launched its first high-end Android smartphone to be used with its electric vehicles.

At writing, Nio stock is trading only slightly above its year-to-date low in early May.