Chinese electric vehicle maker NIO Inc (NYSE:NIO) has been in the middle of immense trouble for much of the year, and it is no surprise that NIO stock has suffered considerably throughout 2019.
The company has had a string of setbacks over recent months, and this morning it made a fresh report that resulted in another plunge for the stock. It has been revealed that NIO has called off its plans to make a substantial investment in a manufacturing plant in China.
As soon as the news broke, the stock started sliding, and at one point, it dropped by as much as 6% to $1.46 this morning.
Last week, NIO stock gained after it emerged that the company was engaged in discussions with Wuxing District in Huzhou City over a $704 million investment in its plant in the district. The plant was supposed to churn out 200,000 electric vehicles a year.
However, the prevailing condition in the market eventually resulted in a breakdown in these talks. No agreement took place, and, naturally, NIO stock started its current downward descent.
NIO stock has declined by as much as 55% over the past three months, and recently, analysts raised questions about its ability to stay afloat.
In its third-quarter report, the company reported a 35% sequential rise in the number of deliveries. While that figure is no doubt impressive, it is important to point out that the company’s cash position is in a precarious state, and analysts believe that it would be difficult for NIO to stay afloat for long. After it had its IPO last year, NIO managed to raise $1 billion, but now it only has $503 million in cash and cash equivalents at its disposal.
Analysts believe that the company either needs a bailout of some nature or a major rebound in the Chinese economy if it is to engineer a comeback. Most experts believe that the better show in the third quarter is no reason to celebrate NIO stock.
Featured image: DepositPhotos © tomwang