In terms of business operations, Nio is skilled at financing! Today, Nio has once again announced a sudden increase in share issuance, with the core information summarized as follows:

Number of Shares Issued

Nio is issuing approximately 119 million shares, diluting the existing share capital by 5.42%.

Purpose of Issuance, Basic Statements

a. Research and development of smart electric vehicle technology and new products; b. Strengthening the balance sheet; c. General corporate purposes (including working capital, etc.).

Target of Issuance - Private Placement

This is a private placement aimed at specific institutions and investors, and will not be offered to public investors in the United States, Hong Kong, or Singapore.

What does Dolphin Research think?

Although Nio has not disclosed who the incoming investors are, due to the private placement model, this issuance will dilute existing shares by 5.42%, and the stock price is expected to drop by 5-10% tonight.

In addition to further diluting the equity of minority shareholders, the fact that Nio is issuing shares at such a low price clearly indicates that they are short on cash.

As of the end of 2024, Nio has cash on hand of 41.9 billion yuan, but interest-bearing liabilities have reached 20.5 billion yuan (with 9.1 billion yuan short-term), meaning that the net cash currently stands at only 21.4 billion yuan. Suppose we estimate under the worst-case scenario, assuming that losses in 2025 remain the same as in 2024 (implying no growth in sales and no further cost control). In that case, Dolphin Research estimates that Nio's actual free cash flow for 2024 will be around -23 billion yuan (2024 Non-GAAP estimated EBITDA minus estimated capital expenditures for 2024), which means that net cash may not even last until 2026.

This also means that if Nio's vehicle sales do not pick up in 2025 (with the new models released in 2025 being mid-to-large SUVs, potentially competing fiercely with Xiaomi's Yu7, and the small car Firefly itself is positioned for a very niche market, not meant for mass sales, while the current models in Nio's main brand are struggling to gain traction in the high-end pure electric market), Nio is in a precarious situation, making this financing a necessary choice.

Dolphin Research has previously mentioned in the financial report interpretation that there are still doubts about the sustainability of Nio's reforms. Although Nio has strong financing capabilities, the patience of capital is becoming increasingly limited, and in this elimination race of new energy vehicles, time is running out for Nio.