The company took advantage of the NIO growth of 919% for the year and raised $2.65 billion by selling 68 million ADS, more than originally planned, but a discount of 7.1 percent from the closing price Friday. Now, what does this mean for companies and investors.
Chinese manufacturer of electric vehicles NIO (NIO) on Monday again placed 68 million American Depositary shares (ADS) each representing one ordinary share of the company’s class A.
The offer price was $39 per share, which represents a discount of 7.1 percent from the closing price Friday and an 18% discount from the 20-day moving average price. As a result, the company NIO has raised $2.65 billion of investments.
Shares of NIO, which showed incredible growth in 919,4% since the beginning of the year, decreased by 2.38% on Monday, increasing its loss last month to -15,16%.
What does this mean for investors?
Discount when selling a large stake in the NIO (68 million is about 6% of the total number of outstanding shares) is not unusual.
Secondary placing of shares in such growth rates is quite reasonable, therefore NIO “cashes” your growth and let the money develop. Besides, it is common practice and NIO already sold secondary shares in August at $17.
According to a press release NIO: “the Company plans to use net proceeds from offering ADS mainly for research and development of new products and technologies of Autonomous driving future generations, expansion of the network of sales and service and market penetration and for General corporate purposes”.
It’s good for the future NIO and its long-term investors.
In November, the NIO announced 146% growth of revenues and increase of postavku electric vehicles in 2.5 times in comparison with last year values.
What analysts say about NIO?
Goldman Sachs analysts have rated the stock NIO rating of “hold” and target price of $59, which is 44% above the closing price Monday of $40,98.
Average rating of the NIO stock analysts Wall Street is regarded as a “moderate buy”, based on 7 ratings a “buy” and 4 “hold”, and at the same time, the average price target is $49.
Offer manufacturer of electric vehicles has been increased from 60 million shares to 68 million means that the underwriters agreed to purchase additional shares of NIO over the original planned amount. Thus, after the increase in supply NIO underwriters – Morgan Stanley and China International Capital Corporation received an option to purchase up to 10.2 million additional shares.
Deutsche Bank analyst, Edison Yu believes that the NIO took the decision about the secondary offer is not so much with the need to recharge, how to use current market conditions to their advantage.
“NIO not need the money, given that it has completed the 3rd quarter with almost $3 billion in available “cash and equivalents”. The company simply saw this as the opportune moment, given the growth stocks (+155% in the last 3 months against the +10% S&P 500) and the overall positive mood of investors,” says Edison Yu
Overall, the analyst believes that the “competitive dynamics” in Chinese industry of electric vehicles “enhanced”, and the efforts by the Nio to gain market share seems to pay off.
Recently, the NIO plans to enter into foreign markets, particularly in Europe confirmed. According to media reports, Zhang Hui, Director General of the Nio Germany, last week held a meeting (via video conferencing) and Wang Weidong, commercial counselor of the Chinese Embassy in Germany to discuss the company’s expansion plans.
