Pre-Market announcement of US$100M Short-Term Convertible.
Unfortunately, this confirms the assumptions I made in my latest video on my YT channel "DONGXii"
> NIO is cash strapped and not able to close a big financing round.
> 1B funding rumours with GAC will not materialise (for now).
> Strategy is to finance operations through creating cash flow by selling cars, which I find very dangerous considering NIO reported dramatically lower average selling prices (ASP), Q1 is usually the weakest quarter for all automotive OEM in terms of sales, impact of corona virus.
> Issuing bond after bond with goal of securing larger sum at terms accepted by management including CEO Li Bin.
> 🔥 Playing with fire: 100M USD in convertible funding. 200M+ USD burn rate.
My prediction is that NIO will be stuck in downward channel and will only find support in the 3 USD area. If by then a real funding round of around 1B is finally announced and secured, it may break out again opening a bullish reversal.
Otherwise NIO could even break below 3USD.
You can see my video I posted on my DONGXii YT channel to get the detailed reasons on the funding situation. I was all correct to suggest that NIO tries to fund for now by going bond by bond. This is very dangerous and should be recognised by the market!
Meanwhile I stay neutral on the stock.
Unfortunately, this confirms the assumptions I made in my latest video on my YT channel "DONGXii"
> NIO is cash strapped and not able to close a big financing round.
> 1B funding rumours with GAC will not materialise (for now).
> Strategy is to finance operations through creating cash flow by selling cars, which I find very dangerous considering NIO reported dramatically lower average selling prices (ASP), Q1 is usually the weakest quarter for all automotive OEM in terms of sales, impact of corona virus.
> Issuing bond after bond with goal of securing larger sum at terms accepted by management including CEO Li Bin.
> 🔥 Playing with fire: 100M USD in convertible funding. 200M+ USD burn rate.
My prediction is that NIO will be stuck in downward channel and will only find support in the 3 USD area. If by then a real funding round of around 1B is finally announced and secured, it may break out again opening a bullish reversal.
Otherwise NIO could even break below 3USD.
You can see my video I posted on my DONGXii YT channel to get the detailed reasons on the funding situation. I was all correct to suggest that NIO tries to fund for now by going bond by bond. This is very dangerous and should be recognised by the market!
Meanwhile I stay neutral on the stock.