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NIO (NYSE:NIO), the high-flying Chinese EV manufacturer, is under pressure today from a confluence of factors that seem to be weighing on the otherwise buoyant outlook of investors.
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NIO announced yesterday that it is now looking to issue at least $1.3 billion in convertible notes:
Bear in mind that these notes may be redeemed by NIO before maturity. Upon maturing, however, the debt is converted into equity. Given the multi-year duration of this debt, there is no immediate dilution threat from this transaction.
Nonetheless, NIO’s downgrade by Citi presents a much more potent bearish influence. To wit, Citi analyst, Jeff Chung, downgraded NIO today from a ‘Buy’ to ‘Neutral’ designation while pegging a $68.30 stock price target. While explaining the rationale behind this move, Chung commented:
Based on this assessment, Chung noted that NIO might only witness a limited incremental effect of 3K to 4K units on sales beginning in Q1 2022. The analyst lowered the aggregate FY 2021 sales estimate from 92K units to 82K units. For FY 2022, Chung now expects NIO to sell only 144K units versus 162K previously expected.
As part of its NIO Day 2020 event, the company had removed the wraps from its ET7 sedan on the 09th of January 2021. With a range of over 1,000 km when equipped with a 150-kWh battery pack, the ET7 is expected to debut in Q1 2022 with a minimum price tag of around $70,000 (RMB 448,000) before the application of subsidies. If, however, users subscribe to the company’s Battery-as-a-Service (BaaS) facility and rent the base 70-kWh battery pack for $151 per month, the ET7’s price would be slashed to $59,000 (RMB 378,000). For more details, head over to our dedicated coverage of the event here.
