© Bloomberg
Shares of rival Tesla Nio recovered at the start of trading on Thursday, a day after the Chinese electric vehicle maker denied allegations by short sellers of inflating revenue and margins, leading to a drop in its share price.
Shares of Nio, quoted in Hong Kong, rose as much as 4.3 percent, well ahead of the growth of the city benchmark Hang Seng by as much as 0.4 percent.
This marked an improvement on Wednesday, when shares fell more than 11% as investors reacted to claims made by Grizzly Research.
The study group said in a report that the Shanghai-based carmaker, through its battery replacement joint venture Wuhan Weineng, had inflated both revenue and revenue by “flooding” Weineng with extra batteries.
In response, Nio said the report was unfounded and contained many errors, unsubstantiated speculation and misleading conclusions and interpretations.
The company added that its business has been subject to due diligence both by the listing process in Hong Kong and by a regular audit of its financial statements.
Analysts at Citi, the US bank, said the market appeared to be “mainly concerned” about the apparent mismatch between consumers and the stock ratio in Weineng. “We expect further clarity on this issue from Nio,” analysts said.
Nio was founded in 2014 and survived a cash flow crisis in 2019 after providing an injection of nearly $ 1 billion from state-sponsored investors in early 2020.
The company relies on selling its battery replacement technology to other groups to accelerate system penetration and expand the market as it tries to win a share of the fast-growing electric car market.
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