Electric Vehicles

Chinese Electric Car Maker Nio’s Shares Plunge on Short Seller Report

 

Nio stocks plunged in New York on Wednesday after a short seller argued in a report that the Chinese electric car company exaggerated its revenue and profitability.

New York-based Grizzly Research said Nio used creative accounting to inflate its net income margins.

Nio denied the allegations, saying the report is “without merit and contains numerous errors, unsupported speculations and misleading conclusions.”

The carmaker said it would “make additional disclosures in due course”.

The company’s shares rose more than 4% in late-morning Hong Kong trading on Thursday after the denial was issued. On Wednesday, the HKEX stock fell nearly 11.4%, while NYSE shares lost 2.6%.

READ MORE: Dramatic Nio Crash in Shanghai Spurs Debate – CnEVPost

Nio Cars: ‘Inflated Revenue’

Grizzly said Nio uses its Wuhan Weineng battery venture to inflate its numbers.

“We believe sales to Weineng have inflated Nio’s revenue and net income by [about] 10% and 95%, respectively,” the report said.
“Specifically, we find that at least 60% of its FY2021 earnings beat seems attributable to Weineng.”

The short seller said the scheme could not have occurred without Weineng’s participation. “Of course, it would take a willing potential accomplice to pull off such a scheme,” the report alleged.

“While Nio represents limited control over Weineng, we identified notable conflicts of interest between the two parties: Weineng’s top two executives currently double as Nio’s vice-president and battery operating executive manager.”

 

  • George Russell

READ MORE:

Nio Seeks Singapore Listing as US Ban Looms – TechCrunch

A Little-Known China EV Maker Eclipses Rivals Nio, Tesla

 

George Russell

George Russell is a freelance writer and editor based in Hong Kong who has lived in Asia since 1996. His work has been published in the Financial Times, The Wall Street Journal, Bloomberg, New York Post, Variety, Forbes and the South China Morning Post.

Recent Posts

China’s 2022 Smartphone Sales Plunge to Lowest in a Decade

Android handset maker Vivo was the top-selling brand in the country, but its total shipments…

14 hours ago

Steps Made Towards Deal on Fresh China Chip Curbs: ASML

Europe’s largest technology company said the measures were not expected to have a material impact…

15 hours ago

India Planning to Classify Clean Tech to Attract Investors

The world's third largest carbon polluter projects it needs $10 trillion to $15 trillion in…

1 day ago

Dutch PM ‘May Not Disclose’ Result Of China Chip Curbs Talks

Netherlands-based ASML Holding, a key supplier to chipmakers, could see at least some of its…

1 day ago

Bankers on Adani’s $2.5Bn Share Sale Mull Delay, Price Cut

Friday's stock market rout dragged shares of group flagship Adani Enterprises 11% below the minimum…

1 day ago

Hong Kong Home Prices Slump 15% in First Fall For 13 Years

Home prices in the territory dropped in 2022 with December seeing the seventh consecutive monthly…

2 days ago