What Went Down With Nio Stock Today?

Chinese electric vehicle maker Nio Inc NIO’s shares fell about 3.5% in after-hours trading on Tuesday.

What Happened: The drop came as the Shanghai-based company disclosed plans, in a regulatory filing, to raise up to $2 billion via an at-the-market sale of American depositary shares.

At-the-market offerings allow a company to sell shares at the then-prevailing market price, in contrast with a fixed price for an initial public offering. 

Nio, seen as a Tesla Inc TSLA rival in China, said it plans to use the net proceeds from the sale to further strengthen its balance sheet alongside general corporate purposes.

Nio said the shares will be offered through Credit Suisse Securities (USA) LLC, Morgan Stanley & Co. LLC, among others and some of the brokerages are expected to make offers and sales both inside and outside the United States through their respective selling agents.

See Also: Rumor: Nio To Launch Its Second Sedan, The ET5, At Nio Day Early Next Year

Why It Matters: The equity offering comes at a time when Nio is struggling due to supply chain constraints. The EV maker reported 5,880 deliveries for the month of August, down 25.9% month-over-month, and cut its third-quarter delivery guidance. Meanwhile, rivals like Li Auto Inc. LI and BYD Co. BYDDY BYDDF registered a rise in deliveries, both on a year-over-year and sequential basis.

Nio shares were trading significantly higher early Tuesday morning, following a market-wide recovery in Chinese Stocks listed in Hong Kong as the country's vice premier reassured continued support to the private sector.

Price Action: Nio shares closed 0.54% higher at $40.59 on Tuesday but fell about 3.5% after-hours following the announcement.

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Photo: Courtesy of Nio