Underlining its inherent volatility, Chinese electric vehicle manufacturer Nio Inc – ADR (NYSE: NIO) stock is retreating after Wednesday's 14%-plus rally that took the stock to its highest level since mid-2019.
Nio Funding News Moves Stock
Nio shares rallied to an intraday high of $4.48 before ending Wednesday's session at $4.29, a gain of 14.10%, on four times their average volume.
The rally was sparked off by a report in Sina Finance that said Guangzhou-based automaker Guangzhou Automobile Group Co Ltd (OTC: GNZUF) is preparing to invest $1 billion in cash-strapped Nio.
GAC confirmed in a communication to the Shanghai stock exchange Thursday that its units and external parties could invest as much as $150 million in Nio.
Nio said in a separate statement that it has explored financing and strategic opportunities and that all commercial discussion remains preliminary and no definitive agreement has been entered into by both parties.
Nio's Funding Needs
Nio posted a record delivery number for the fourth quarter. Yet the company's precarious cash position has continued to remain an overhang on shares.
As of Sept. 30, the company had cash and cash equivalents of $274.3 million.
For the third quarter alone, the company's operating expenses were $306.06 million.
Nio acknowledged in it third-quarter release that the cash balance is not adequate to provide the required working capital and liquidity for continuous operation in the next 12 months.
The company has been vigorously pursuing cost cuts in a bid to preserve cash.
A firm commitment on funding could be the next positive catalyst for the stock.
Nio shares were trading 2.22% higher at $4.38 at the time of publication Thursday.
Nio Shares Trade Higher On Report of Chinese Factory Deal Talks
Nio Sustains Sales Momentum In November, Launches Third SUV
Photo courtesy of Nio.
See more from Benzinga
- Nio Shares Trade Higher After Chinese Official Says EV Subsidy Will Be Maintained
- Should Nio Be Worried About Tesla's Model 3 Order Overflows In China?
- Nio Analyst Says Fundamentals Have Bottomed Out, Valuation Reflects Sales Momentum
© 2020 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.