On Wednesday, Nio stocks took a nosedive despite unveiling details of its upcoming car-centric phone with flagship specs.
Its price per share plummeted by 17.07% to $8.55 on September 20. However, market watchers anticipate a 1.64% recovery to $8.69 apiece for the upcoming session.
Negative sentiment from a planned $1.15 billion convertible debt offering overshadowed the positive sentiment from the car-centric phone. Upon maturity, the resulting dilution can shed about 5.00% from the current shareholder ownership of the electric vehicle (EV) manufacturer.
The Chinese automaker intends to sell $500.00 million notes due October 2029 and another $500.00 million notes due October 2030. Additionally, each allotment allows purchasers to buy up to $75.00 million in Nio senior notes within the next 30 days.
Having approximately $3.90 billion in debt, the EV company plans to strengthen its balance sheet with the cash inflow. Nio has been bleeding money in 2023, adding $650.00 million to its total debt after just the first two quarters.
Last year, the company reported an operating loss of $2.10 billion with a negative free cash flow of $1.60 billion. Industry analysts warn that more debt offerings are likely to come as Nio struggles to sell its electric vehicle lineup.
Shareholders are pinning their hopes on the October 02 release of the company’s delivery data for September. Its stock price can potentially spark a rally if Nio closes the third quarter with more than 57,000 deliveries.
Car-Centric Phone Designed for Nio Car Users
Nio CEO William Li said that the Shanghai-based company will soon showcase the world’s first truly car-centric phone. Moreover, the new phone will augment and facilitate communication with Nio EVs, including substituting it as a car key.
The EV manufacturer is collaborating with popular handset makers OnePlus, Oppo, and Vivo to guarantee the phone’s capabilities. Li promised competitive pricing and specs that can compete head-to-head with Apple’s iPhone 15 and other flagship handsets.
Anticipating a full reveal on the company’s Innovation Day on September 21, stakeholders remain pessimistic about the product. Industry experts doubt the car-centric phone can gain enough momentum to curtail the impact of the $1.00 billion debt sale.
