Nio Analyst Dismisses Short Seller Allegations: Why They're Bullish On Chinese EV Stock

Zinger Key Points
  • CFRA remains bullish on Nio following a new report by Grizzly Research.
  • On Tuesday, Grizzly accused Nio of shady accounting practices.

Shares of Chinese electric vehicle maker Nio Inc - ADR NIO were falling Wednesday following a new report by short seller Grizzly Research.

On Wednesday morning, CFRA analyst Lim Jian Xiong said the allegations in the short seller report have no impact on his outlook for Nio shares.

Grizzly's Allegations: In its report on Tuesday, Grizzly accused Nio of playing "accounting games to inflate revenue and boost net income." The firm said Nio is taking a book out of the Valeant Pharmaceuticals playbook in using a third-party relationship to manipulate its accounting.

Related Link: Short Seller Spruce Point Targets Generac, Alleges 'Numerous Shady M&A Deals'

"While this rapid growth is impressive on the surface, our investigation has found Weineng might be to Nio what Philidor was to Valeant. Just as Philidor aided Valeant in habitually making numbers, Nio has curiously exceeded estimates since establishing Weineng," Grizzly said.

In response to the report, Nio released a statement denying Grizzly's claims.

"The report is without merit and contains numerous errors, unsupported speculations and misleading conclusions and interpretations regarding information relating to the company," the automaker said Wednesday. 

Related Link: Twitter Board Unanimously Approves Musk Buyout: What Happens Next?

Nio Analyst Responds: Xiong said Wednesday that weakness in Nio's share price in response to the Grizzly Research report is a buying opportunity for long-term investors.

"We think Nio's EV portfolio expansion (3 SUV and 2 sedan models in 2022) will sustain its strong revenue momentum, drive an improvement in operating leverage, and support our projected turnaround in Nio's business by Q4 2023," Xiong said.

Xiong reiterated his Buy rating and $35 price target for Nio.

Benzinga's Take: Nio plans to make additional disclosures to the U.S. Securities and Exchange Commission that will hopefully address some of the conclusions that Grizzly reached in its report.

Given Nio shares are only down 2.6% Wednesday afternoon, it seems the market agrees with Xiong's take that the Grizzly Research report is nothing to be concerned about.

Photo courtesy of Nio. 

Posted In: CFRAGrizzly ResearchLim Jian XiongSprucepoint CapitalAnalyst ColorAsiaShort SellersPrice TargetReiterationMarketsAnalyst Ratings

Ad Disclosure: The rate information is obtained by Bankrate from the listed institutions. Bankrate cannot guaranty the accuracy or availability of any rates shown above. Institutions may have different rates on their own websites than those posted on The listings that appear on this page are from companies from which this website receives compensation, which may impact how, where, and in what order products appear. This table does not include all companies or all available products.

All rates are subject to change without notice and may vary depending on location. These quotes are from banks, thrifts, and credit unions, some of whom have paid for a link to their own Web site where you can find additional information. Those with a paid link are our Advertisers. Those without a paid link are listings we obtain to improve the consumer shopping experience and are not Advertisers. To receive the rate from an Advertiser, please identify yourself as a Bankrate customer. Bank and thrift deposits are insured by the Federal Deposit Insurance Corp. Credit union deposits are insured by the National Credit Union Administration.

Consumer Satisfaction: Bankrate attempts to verify the accuracy and availability of its Advertisers' terms through its quality assurance process and requires Advertisers to agree to our Terms and Conditions and to adhere to our Quality Control Program. If you believe that you have received an inaccurate quote or are otherwise not satisfied with the services provided to you by the institution you choose, please click here.

Rate collection and criteria: Click here for more information on rate collection and criteria.