Benzinga - by Shanthi Rexaline, Benzinga Editor.
Shares of Chinese electric vehicle startup Nio, Inc. (NYSE:NIO) slumped in premarket on Monday, as a host of factors weighed down.
In premarket trading, the stock fell 6.33% to $7.99, according to Benzinga Pro data.
Some of the weaknesses reflected the negative sentiment set in motion by a slide in Chinese property stocks in the Hong Kong and Chinese markets.
The property stocks reacted to Evergrande stating that it was not able to raise debt due to an investigation into its principal subsidiary. The Hong Kong-listed shares of Nio closed Monday’s session down 4.60%.
The broader market sentiment ahead of the opening was one of caution despite the four-day losing streak, as bond yields continue to rise.
Nio could also be reacting to a Bloomberg report that said the company is looking at the prospect of raising $3 billion and has approached Middle East investors in this regard. The Shanghai-based company recently announced a $1 billion convertible senior debt offering. In a release on Monday, the company said it has closed the offering.
EV manufacturing is a capital-intensive business and given Nio is still making losses and it has an ambitious expansion plan, funding could be key to keep the operations going. That said, investors will likely react to negatively to any additional stock offering due to its dilutive influence on the stock price.
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