Why Nio Stock Plunged Today

Core Viewpoint - Nio's stock is experiencing a significant decline due to the announcement of a new capital raise, with shares dropping nearly 11% initially and recovering slightly to a 9.5% decrease [1]. Group 1: Financial Performance - Nio reported a record monthly delivery of 31,305 electric vehicles in August, primarily driven by its new brands, Onvo and Firefly, which target mass-market consumers [3]. - The company incurred a net loss of nearly $700 million in the second quarter, but plans to increase the volume of its new brands to potentially improve its financial situation [5]. Group 2: Capital Raise Details - Nio is raising $1 billion through an equity offering, taking advantage of a recent stock surge, with new shares priced at $5.57 per American depositary share (ADS) after closing at $6.28 [4]. - The capital raised will be used for research and development of core technologies, development of future technology platforms and vehicle models, expansion of the battery swapping and charging network, and general corporate purposes, although this will lead to shareholder dilution [4]. Group 3: Market Reaction - Prior to the announcement, Nio's stock had increased by 30%, driven by investor anticipation of strong sales and the upcoming second-quarter report [3]. - The fresh capital raise has led to concerns among investors, as it dilutes existing shareholders while aiming to strengthen the company's long-term position [5].