© Bloomberg
Shares of Tesla’s rival Nio bounced back in early negotiations on Thursday, a day after the Chinese electric vehicle manufacturer denied allegations by short sellers of inflating revenues and margins that drove down the price of their actions.
Shares of Hong Kong-listed Nio were up 4.3%, well ahead of the city’s Hang Seng benchmark gains of up 0.4%.
This marked an improvement since Wednesday, when shares fell more than 11 percent, as investors reacted to complaints made by short seller Grizzly Research.
The research group said in a report that the Shanghai-based automaker, through its battery exchange joint venture Wuhan Weineng, had inflated both revenue and profits by “flooding” Weineng with additional batteries.
In response, Nio said the report had “no merit and contains numerous errors, unsupported speculation and misleading conclusions and interpretations.”
The company added that its business has been subject to due diligence in both the Hong Kong stock exchange listing process and the regular audit of its financial statements.
Analysts at Citi, the U.S. bank, said the market appears to be “primarily concerned” by an apparent discrepancy between users and the battery inventory relationship in Weineng. “We expect more clarity on this from Nio,” analysts said.
Nio was founded in 2014 and survived a cash flow crisis in 2019 after securing an injection of nearly $ 1 billion from state-backed investors in early 2020.
The company has opted to sell its battery exchange technology to other groups to accelerate system adoption and expand the market as it tries to gain a share of the fast-growing electric vehicle market.