NIO

NIO Inc.

21.11
USD
1.39%
21.11
USD
1.39%
11.67 44.27
52 weeks
52 weeks

Mkt Cap 28.75B

Shares Out 1.36B

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Why Nio Stock Suddenly Reversed Today

What happened After opening in the green this morning, Nio (NYSE: NIO) stock dropped sharply after 10:30 a.m. ET and hit a low of 4.1% by 10:54 a.m. ET. A short-seller attack is to blame for the electric vehicle (EV) stock's reversal today. So what Tuesday morning, Grizzly Research, which claims to do "in-depth due diligence" of publicly traded companies to produce "differentiated" research, alleged Nio of using an "audacious scheme" to inflate revenue and profitability. In its short-seller report, Grizzly Research raised several allegations against Nio. Among other things, it primarily believes Nio has used Wuhan Weineng, a third party, to inflate its numbers and beat the already lofty analyst estimates. Specifically, the researcher estimates sales to Weineng have inflated Nio's revenue and net income by almost 10% and 95% respectively so far and alleges Nio is pulling off this accounting game through corporate governance wrongdoing. Nio is well known for its battery-as-a-service (BaaS) program, through which a customer can buy Nio cars without batteries for low prices and instead rent and swap batteries as required as part of a subscription. Nio sells these battery packs to Weineng and recognizes revenue from those sales. Weineng earns the subscription fees. Grizzly Research claims its investigation revealed Nio had "oversupplied" battery packs to Weineng in recent quarters only to inflate its revenue. It also highlighted links between Weineng's and Nio's executives and share agreements that could materially dilute shareholder wealth in the future. Now what Nio stock was under considerable pressure for several months, and it's only over the past month or so that the stock has bottomed -- as of this writing, Nio stock has rallied 28% in June alone. Nio reported strong deliveries last month and is focused on new vehicle launches that are expected to start contributing to its sales in the coming months. Just when investors believed Nio's worst days were over, today's short-seller attack reminded them of the potential risks of investing in a Chinese start-up in a young industry. Investors, however, might want to wait for Nio's response to Grizzly Research's allegations instead of panic-selling. 10 stocks we like better than Nio Inc. When our award-winning analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* They just revealed what they believe are the ten best stocks for investors to buy right now... and Nio Inc. wasn't one of them! That's right -- they think these 10 stocks are even better buys. *Stock Advisor returns as of June 2, 2022 Neha Chamaria has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nio Inc. The Motley Fool has a disclosure policy. The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc. Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

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