Industry

NIO (NIO) stock spikes after EV maker scores massive $2.2 billion investment

Chinese EV maker NIO (NIO) is trending after receiving $2.2 billion in funding from Abu-Dhabi’s CYVN Holdings. NIO’s stock is up over 5% Monday following the investment.

NIO stock climbs after $2.2 billion investment

With the new investment, CYVN will become a major NIO shareholder. The Abu Dhabi-backed investment company is investing $2.2 billion by subscribing to 294 million newly issued shares. The share repurchase price is $7.50, according to the press release.

The news comes after NIO received nearly $740 million from CYVN in July. After the transaction is complete, CYVN will own 20.1% of the company, up from 7%.

The transaction is expected to close the last week of December. Upon closing, CYVN can nominate two directors to NIO’s board (as long it upholds at least 15% ownership).

NIO said the partnership will look for strategic tech partners in international markets. “With the enhanced balance sheet, NIO is well prepared to sharpen brand positioning, bolster sales and service capabilities,” NIO’s CEO William Li explained.

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NIO new ES6 (Source: NIO)

The news comes as NIO expands the brand overseas with new model launches. With the launch of the new ES6 and EC6, NIO’s lineup has completely shifted to its next-gen 2.0 platform.

Despite EV deliveries climbing 135% quarter-over-quarter in Q3, NIO is still losing money. NIO posted a net loss of $624 million (RMB 4.6 billion) in the third quarter. As of Sept 30, NIO had $3.3 billion in cash and equivalents (excluding restricted cash and short-term investments) on its balance sheet.

NIO expects to deliver between 47K and 49K EVs in Q4, up 17% to 22% from last year. Revenues are projected between $2.2 billion and $2.3 billion.

The EV maker trimmed around 10% of its staff last month amid intensifying competition. NIO also cut prices earlier this year to keep pace with market leaders like BYD and Tesla.

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Following the news, NIO stock is up 5% in Monday’s trading session. NIO’s shares are down nearly 50% from a peak of $16.18 per share this summer. The Chinese EV makers’ share prices have slipped 24% over the past 12 months.

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