Nio shares plunge on short-seller allegations; company says report ‘without merit’
SHARES of Nio took a nosedive in the US, Hong Kong and Singapore after a report was published by short-seller Grizzly Research claiming the Chinese electric vehicle (EV) maker has been “playing Valeant-esque accounting games” to inflate its revenue and boost net income margins.
Among other allegations, Grizzly’s Jun 28 report said Nio was likely using an unconsolidated related party to exaggerate the group’s revenue and profitability.
The short-seller also insinuated Wuhan Weineng Battery Asset Management, which operates Nio’s battery assets and is partially owned by the group, as a potential accessory to the alleged crime.
Referring to the downfall of Valeant Pharmaceuticals International - which reportedly manipulated prescriptions and steered patients to more expensive drugs with the help of mail-order pharmacy Philidor - Grizzly opined that Wuhan Weineng “might be to Nio what Philidor was to Valeant”.
Following the emergence of the report, Nio shares on the New York Stock Exchange ended Tuesday (Jun 28) lower at US$22.36. As at 2.30 pm on Wednesday, the company’s securities listed on the Hong Kong Stock Exchange were down by HK$17.10 or 9.2 per cent to HKS$169.60.
Dual-class shares of Nio on the Singapore Exchange paused US$1.82 or 7.7 per cent lower at US$21.90 as at the midday break on Wednesday, before the company called for a trading halt to issue a statement addressing Grizzly’s report.
Calling the allegations “without merit”, Nio said the report also contained “numerous errors, unsupported speculations and misleading conclusions and interpretations” regarding information about the company.
Nio said its board of directors – including its audit committee – is reviewing Grizzly’s allegations and considering the appropriate course of action to protect the interests of its shareholders.
The counter continued its decline upon resumption of trading, after the company requested to lift its trading halt at 1.03 pm. As at 2.56 pm, dual-class shares of Nio were trading down US$2.57 or 10.8 per cent at a low of US$21.15. It closed at US$21.01, down 11.4 per cent.
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