U.S.-listed shares of Nio Inc. were falling more than 5% in after-hours action Monday after the Chinese electric-vehicle company announced a convertible-bond offering.
The company is proposing a $1 billion offering, with half the bonds due in 2029 and the other half due in 2030. Nio
intends to use part of the proceeds from the offering to repurchase a portion of existing debt securities, “and the remainder mainly to further strengthen its balance-sheet position as well as for general corporate purposes.”
Shares of Nio have gained about 6% so far this year, though they’ve fallen by nearly half over a 12-month basis.
The company continues to log swelling losses. Nio posted a GAAP net loss of RMB6.06 billion in the latest quarter, more than double the losses it posted in the year-earlier quarter. That marked the third quarter in a row in which losses doubled, according to FactSet data. Losses have swelled on a year-over-year basis in each of the past five quarters, according to FactSet data.
Meanwhile, Nio could be adding to a glut for luxury electric vehicles. As Barron’s magazine pointed out in a recent cover story, expensive electric vehicles command just a fraction of the market, while there’s heated competition in the space.
Nio isn’t the only electric-vehicle company to turn to the convertible-note market. Electric-truck maker Nikola Corp.
said in August that it intended to launch a $325 million offering for senior convertible bonds. Fisker Inc.
back in July closed a $340 million convertible-debt offering.