Yes, the picture above depicts wolf in a sheep skin.
It pretty much sums up my current sentiments on NIO”s CEO Li Bin.
Character assassination aside, let the facts speak for themselves. (see below)
Capital Raised (2020–2025).
Throughout NIO’s brief history, it has utilized various financial instruments to raise capital to tide it over the rough patches and there were plenty.
This is acceptable when the company is (a) newly listed and (b) involved in a capital intensive industry.
However, there must be a ‘calculated’ threshold to such acceptance.
Otherwise it is as good as turning a blind eye to the flaws inherent in a company eg. Weak Board of directors, Useless CEO, CFO, COO etc…
Timeline.
February 2020: $100 million funding round
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$30 million in convertible bonds from Joy Capital
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Amount: $100 million total
Early 2020: RMB 7 billion equity investment
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Investor: Hefei municipal government
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Amount: Approximately $990 million
July 2023: Strategic investment
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Investor: CYVN Holdings (Abu Dhabi investment firm)
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Amount: $1.1 billion
18 December 2023: Private Investment in Public Equity (PIPE) funding round
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Investor: CYVN Holdings
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Amount: $2.2 billion
February 2024: Nio Capital fundraising (NIO's VC arm)
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Amount: Over RMB 3 billion (approximately USD420 million)
27 March 2025: Equity placement
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Amount: HK$4,030.13 million (approximately USD518 million)
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136.8 million new Class A shares at HK$29.46 per share
Dilution Impact
Each of these events has diluted existing shareholders to varying degrees:
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The 2020 convertible bond issuance had potential future dilutive effects.
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The Hefei government investment in 2020 likely caused significant dilution but was crucial for NIO's survival.
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The CYVN Holdings investments in 2023 (totaling $3.3 billion) caused substantial dilution, estimated around 20-25%.
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Latest March 2025 equity placement represents approximately 5.7% dilution.
R&D Expenses.
According to CEO Li Bin, proceeds from latest shares issue will go towards:
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Shoring up NIO’s balance sheet.
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Research & development work.
Based on NIO's financial reports, above shows NIO's R&D expenditure from 2020 - 2024.
It has increased exponentially since Q4 2021, peaking in Q4 2022 & Q4 2023.
All incessant spendings have eaten into its revenue.
What made it worse is that it did not translate into additional sales.
For every sales dollar earned, almost 25% of it was siphoned off for R&D, not taking into account overheads in running the business.
Did Li Bin try to rein-in the R&D expenses ? Looking at the data, it does not appear so.
Sustainability Assessment
NIO's reliance on frequent capital raises raises concerns about long-term sustainability:
Positive aspects:
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Successful in attracting large investments, indicating investor confidence.
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Funds directed towards R&D and balance sheet strengthening
Risks:
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Continued reliance on external funding suggests ongoing cash flow challenges.
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Repeated dilution may lead to investor fatigue.
Potential Fallouts
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Share price pressure due to increased supply
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Erosion of investor sentiment if profitability remains elusive
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Increased scrutiny on cash burn rate and path to profitability.
Stock Price - 27 Mar 2025.
Traders have made known their displeasure on the latest equity placement.
By end of Thu, 27 Mar 2025 NIO has lost -5.69% of its stock price, closing at $3.98.
It has achieved another first in falling below the $4.00 mark.
On Fri, 28 Mar 2025 - NIO slipped further below the $4.00 mark to end the week at $3.75 per share.
My viewpoints : (mine only)
Personally, I think NIO should just focus on one item for R&D only.
If it is going to be swap station (its core revenue generating source), so be it.
Until sales pick up; it should not be spending anymore on Nomi, its interactive chatbot. Neither should it continue to invest in its mobile phone, a total waste of NIO’s limited resources.
What is the point of having technologically advanced EVs when there is little to no demand for it ?
NIO should focus on selling its already technologically advance EVs.
During every quarterly earnings conference call, there is never a clear report of NIO’s foray into EU, that is already a few years in the making.
With a weak EU economy and increased levy from EU - NIO should consider exiting EU altogether.
Lest we forget that part of the revenue generated (in China) goes towards running its overseas ventures, that is not going anywhere.
With so many areas of business draining its limited resource, it is time to bite the bullet, before even its China market presence gets affected.
It is time that NIO learn from its peers, $Li Auto(LI)$ already profitable & $XPeng Inc.(XPEV)$ almost profitable - what are their secrets and emulate their successes, before it is too late.
If not for the fact that I am sitting on substantial paper losses, I would have exited NIO long ago. It is not worth the stress with one surprise after surprise, from a CEO that’s hard of learning !
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Do you think NIO did the “right” thing to issue more shares to raise capital ?
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Do you think NIO’s share will ever hit the $10 mark ?
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