NIO share price: what’s the latest after favourable Q3 earnings?
The electric carmaker delivered a strong Q3 earnings after several disappointing quarters, but the stock remains under pressure with investors fearing the company could collapse without a cash injection.
NIO delivered a decent set of Q3 earnings in October, with vehicle deliveries up 35% from the previous quarter to 4,799, finally sending the stock a touch higher.
However, since the start of the year, NIO has seen its share price fall by more than 75%, from $6.20 a share in January to trade at $1.50 as of 15:25 GMT on Friday.
Is NIO on the brink of collapse?
Investors are concerned about the strength of the electric carmaker’s balance sheet, with the company receiving a ¥10 billion ($1.45 billion) cash injection from the Chinese government back in May.
However, even a government bailout may not be enough, with the company likely to need a further injection of cash in order to avoid collapse.
You can go long or short NIO with IG using derivatives like CFDs and spread bets.
NIO struggles with financing
The Chinese government was forced to step in and offer emergency financing to NIO after the electric carmaker continues to burn through cash at a rapid rate.
In its Q3 results, the company admitted that it had spent $620 million in its second quarter, leaving it with $503.4 million in cash as of June 30.
NIO has also struggled to secure financing from investors, with Tencent meant to assist with the sale of a $200 million convertible notes offering, though it has not been completed and, even it does, it won’t do much with the carmaker haemorrhaging money at its current pace.
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