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NIO Stock Falls 9% on $1B Equity Offering Plan: Time to Buy the Dip?
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Key Takeaways
NIO shares fell 8.9% to $5.72 after announcing a $1B equity offering of about 182M shares.
Funds will support R&D, new platforms, battery swap network expansion, and balance sheet strength.
NIO forecasts Q3 deliveries of 87K-91K units, up 41-47% year over year, with new models driving demand.
NIO Inc. (NIO - Free Report) tumbled 8.9% yesterday to close at $5.72, after the company announced a $1 billion equity offering. The Chinese electric vehicle (EV) maker intends to sell roughly 182 million shares of common stock, with underwriters having the option to sell an additional 27 million shares. Such offerings often lead to near-term sell-offs, as the new shares dilute existing shareholder value.
NIO said the funds would be used to boost research and development for smart EV technologies, develop future platforms and models, strengthen its battery swapping and charging network, and bolster its balance sheet.
This is the company’s second capital raise this year. In April, the company completed its first share placement this year, raising HKD 4 billion through a discounted sale of 136.8 million shares, which sent the stock to its lowest levels of the year.
With the latest capital raise announcement, the stock’s dip may look like a buying opportunity. But with challenges ahead—including share dilution, increasing competition and profit pressures—investors need to weigh whether now is the right time to buy or if caution is warranted.
NIO’s Growth Drivers: Sales, Models and Technology
NIO’s deliveries show momentum. In the last reported quarter, the company delivered 72,056 vehicles, up 25.6% from the previous period. Growth was led by the mass-market ONVO brand, alongside solid performance from the high-end Firefly series. The ONVO L90, launched on July 31, quickly became a hit, with 10,575 deliveries in August alone. NIO unveiled the all-new ES8, its premium 3-row SUV, in August. The ES8 is expected to strengthen NIO’s presence in the core premium SUV segment.
The company expects third-quarter deliveries in the range of 87,000-91,000 units, implying 41-47% year-over-year growth. For the fourth quarter, NIO aims to deliver 150,000 units, including 50,000 vehicles across each of its brands—NIO, ONVO and Firefly. New product launches and robust demand are expected to drive growth.
NIO’s technological edge is also noteworthy. Models like the ET9 and four refreshed 2025 models (ET5, ET5T, EC6, and ES6) use the company’s proprietary smart-driving chip and full-vehicle operating system.
Battery swap technology remains a standout advantage, with over 3,500 swap stations worldwide—including 1,000+ on China’s highways—and more than 84 million swaps completed. By July, the network connected 550 cities, offering three-minute swaps on long trips, while over 27,000 superchargers and destination chargers further support NIO drivers.
The company expects vehicle margins to improve in the third quarter, driven by full-quarter deliveries of refreshed models, as well as the L90 launch. The L90 and ES8 target roughly 20% gross margin, supported by in-house innovation and cost controls. The fourth quarter will mark the first full quarter of sales for both the L90 and ES8, potentially boosting profitability and reinforcing NIO’s competitive position in the EV market.
NIO’s Price Performance & Valuation
Over the past three months, shares of NIO have rallied 58%, outperforming the industry as well as its close peers, Li Auto (LI - Free Report) and XPeng Inc. (XPEV - Free Report) . While Li Auto has declined 17%, XPeng has risen 4.5% over the same timeframe.
3-Month Price Performance Comparison
Image Source: Zacks Investment Research
NIO is currently trading at a forward sales multiple of 0.68, lower than Li Auto and XPeng but higher than the industry.
NIO's P/S Vs. Industry, LI & XPEV
Image Source: Zacks Investment Research
What Do Estimates for NIO Say?
The Zacks Consensus Estimate for NIO’s 2025 and 2026 revenues implies year-over-year growth of 49% and 41.5%, respectively. The bottom-line estimates for current and next year call for 33.7% and 74% improvement, respectively, on a year-over-year basis.
See how the bottom line estimates have been revised over the past 90 days.
Image Source: Zacks Investment Research
Don’t Buy NIO Shares Just Yet
Yesterday’s dip in NIO stock may look tempting, but caution is warranted. While the company’s growth and new models show long-term potential, near-term challenges remain significant. Competition in China’s EV market is intense, which could pressure pricing and margins. The breakeven timeline also appears too ambitious, and rising SG&A expenses, combined with a high long-term debt-to-capitalization ratio of 75%, add to the risk. Given these factors, NIO shares may be better suited for long-term investors who are willing to ride out volatility rather than buying aggressively now.
Image: Bigstock
NIO Stock Falls 9% on $1B Equity Offering Plan: Time to Buy the Dip?
Key Takeaways
NIO Inc. (NIO - Free Report) tumbled 8.9% yesterday to close at $5.72, after the company announced a $1 billion equity offering. The Chinese electric vehicle (EV) maker intends to sell roughly 182 million shares of common stock, with underwriters having the option to sell an additional 27 million shares. Such offerings often lead to near-term sell-offs, as the new shares dilute existing shareholder value.
NIO said the funds would be used to boost research and development for smart EV technologies, develop future platforms and models, strengthen its battery swapping and charging network, and bolster its balance sheet.
This is the company’s second capital raise this year. In April, the company completed its first share placement this year, raising HKD 4 billion through a discounted sale of 136.8 million shares, which sent the stock to its lowest levels of the year.
With the latest capital raise announcement, the stock’s dip may look like a buying opportunity. But with challenges ahead—including share dilution, increasing competition and profit pressures—investors need to weigh whether now is the right time to buy or if caution is warranted.
NIO’s Growth Drivers: Sales, Models and Technology
NIO’s deliveries show momentum. In the last reported quarter, the company delivered 72,056 vehicles, up 25.6% from the previous period. Growth was led by the mass-market ONVO brand, alongside solid performance from the high-end Firefly series. The ONVO L90, launched on July 31, quickly became a hit, with 10,575 deliveries in August alone. NIO unveiled the all-new ES8, its premium 3-row SUV, in August. The ES8 is expected to strengthen NIO’s presence in the core premium SUV segment.
The company expects third-quarter deliveries in the range of 87,000-91,000 units, implying 41-47% year-over-year growth. For the fourth quarter, NIO aims to deliver 150,000 units, including 50,000 vehicles across each of its brands—NIO, ONVO and Firefly. New product launches and robust demand are expected to drive growth.
NIO’s technological edge is also noteworthy. Models like the ET9 and four refreshed 2025 models (ET5, ET5T, EC6, and ES6) use the company’s proprietary smart-driving chip and full-vehicle operating system.
Battery swap technology remains a standout advantage, with over 3,500 swap stations worldwide—including 1,000+ on China’s highways—and more than 84 million swaps completed. By July, the network connected 550 cities, offering three-minute swaps on long trips, while over 27,000 superchargers and destination chargers further support NIO drivers.
The company expects vehicle margins to improve in the third quarter, driven by full-quarter deliveries of refreshed models, as well as the L90 launch. The L90 and ES8 target roughly 20% gross margin, supported by in-house innovation and cost controls. The fourth quarter will mark the first full quarter of sales for both the L90 and ES8, potentially boosting profitability and reinforcing NIO’s competitive position in the EV market.
NIO’s Price Performance & Valuation
Over the past three months, shares of NIO have rallied 58%, outperforming the industry as well as its close peers, Li Auto (LI - Free Report) and XPeng Inc. (XPEV - Free Report) . While Li Auto has declined 17%, XPeng has risen 4.5% over the same timeframe.
3-Month Price Performance Comparison
NIO is currently trading at a forward sales multiple of 0.68, lower than Li Auto and XPeng but higher than the industry.
NIO's P/S Vs. Industry, LI & XPEV
What Do Estimates for NIO Say?
The Zacks Consensus Estimate for NIO’s 2025 and 2026 revenues implies year-over-year growth of 49% and 41.5%, respectively. The bottom-line estimates for current and next year call for 33.7% and 74% improvement, respectively, on a year-over-year basis.
See how the bottom line estimates have been revised over the past 90 days.
Don’t Buy NIO Shares Just Yet
Yesterday’s dip in NIO stock may look tempting, but caution is warranted. While the company’s growth and new models show long-term potential, near-term challenges remain significant. Competition in China’s EV market is intense, which could pressure pricing and margins. The breakeven timeline also appears too ambitious, and rising SG&A expenses, combined with a high long-term debt-to-capitalization ratio of 75%, add to the risk. Given these factors, NIO shares may be better suited for long-term investors who are willing to ride out volatility rather than buying aggressively now.
NIO currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.