Nio exaggerates its revenue and profitability, a short seller argued in a report, sending the company's shares plunging in New York on Wednesday. The company rejected the claims on Thursday. Photo: Reuters.
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
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.”
Android handset maker Vivo was the top-selling brand in the country, but its total shipments…
Europe’s largest technology company said the measures were not expected to have a material impact…
The world's third largest carbon polluter projects it needs $10 trillion to $15 trillion in…
Netherlands-based ASML Holding, a key supplier to chipmakers, could see at least some of its…
Friday's stock market rout dragged shares of group flagship Adani Enterprises 11% below the minimum…
Home prices in the territory dropped in 2022 with December seeing the seventh consecutive monthly…