Dividend Stocks

NIO Stock Alert: The $1 Billion Reason Nio Is Down Today

Electric vehicle (EV) maker Nio (NASDAQ:NIO) is the top trending ticker on social media, and NIO stock is down more than 8% today.

The decline was triggered by the Chinese company’s announcement that it would offer $1 billion of convertible notes.

More About the Offering

Half of Nio’s notes will mature in 2029, and another 50% will mature in 2030. The automaker intends to use a portion of the proceeds from the notes to cancel a portion of its current debt. Another part of the funds raised will be used by Nio “for general corporate purposes” and to “strengthen its balance sheet.”

The owners of the notes that mature in 2029 can require the company to redeem their notes for cash in October 2027, while the owners of those that mature in 2030 can require Nio to redeem them for cash in October 2028.

If the owners of the notes choose to redeem them prior to their maturity dates, Nio can decide how much of the notes’ value to repay in stock and how much of its value to repay in cash. Owners of the notes who receive Nio’s stock traded in New York will eventually be able to convert them into shares traded in Hong Kong or Singapore.

The interest rate of the notes will be decided at a future time.

More Information About Nio and NIO Stock

In August, the automaker’s deliveries rose 81% year-over-year to 19,239. In July and August, the automaker delivered a combined total of nearly 40,000 EVs.

Heading into today, NIO stock was down 5% in the last month. However, it climbed 10% in the last three months and 6% so far this year.

On the date of publication, Larry Ramer did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Larry Ramer has conducted research and written articles on U.S. stocks for 15 years. He has been employed by The Fly and Israel’s largest business newspaper, Globes. Larry began writing columns for InvestorPlace in 2015. Among his highly successful, contrarian picks have been PLUG, XOM and solar stocks. You can reach him on Stocktwits at @larryramer.