NIO Shares Fall On Discounted Offering Price

Nio Inc. shares fell 2% after it amended its American Depository Share (ADS) offering on Monday by increasing the initial size by 13% above what was announced on Thursday evening after the closing bell. They priced the offering at $39 per ADS, which reflects a 5% discount to Monday’s closing price.

Nio Inc. (NIO) initially intended to offer 60 million ADSs but they up-sized the offering to 68 million. Underwriters (Morgan Stanley and China International Capital Corp. Hong Kong Ltd.) will now have a 30-day option to purchase up to an additional 10.2 million ADSs, revised upward from 9 million ADSs originally.

Nio raised $2.65 billion from the offering and could potentially raise up to an additional $400 million if the options are exercised.

Proceeds of the offering, according to the company, will go towards Research and Development of new products, network expansion and general corporate purposes.

Shares of Nio have dropped over 9% since the initial announcement of the offering was made on Thursday evening. (See NIO stock analysis on TipRanks)

Daiwa analyst Kelvin Lau initiated a Buy rating on the stock yesterday with a price target of $59, which suggests upside potential of approximately 43%. He refers to Nio as “the distinguished premium” battery EV maker in China and expects sales volumes in 2023 to be 140,000 units.

Despite the recent price action, consensus among analysts remains a Moderate Buy based on 8 Buys and 4 Holds. The average price target of $49.84 implies a potential upside of around 22% over the next 12 months.

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