Keep an eye on Nio Inc. (NIO).
The stock is down on short seller comments from Grizzly Research. In fact, their report claims NIO is “too aggressive in selling battery assets to Weineng, selling more batteries than customers who have signed up for NIO’s battery as a service. That might make NIO sales look higher than they should,” as noted by Barron’s.
In the full report found here, Grizzly added, “NIO is likely using an unconsolidated related party to exaggerate revenue and profitability. Through oversupplying batteries to Weineng and pulling forward revenue, NIO has reported 2.6 billion RMB of inflated revenue for the 9-month ending September 2021 (~10% of its revenue for the period). Even worse, should have reported a net loss of 3.6B RMB for the period, which is double the loss that NIO actually reported. In the background of this Valeant-style accounting, we believe NIO has enriched Chinese government entities and company insiders.”
However, NIO says the report is without merit and has numerous errors, as well as misleading conclusions. The company is forming a committee to look into the Grizzly report allegations.
As with a lot of these short seller reports, wait for the chaos to be priced in.
This may be another opportunity, where crisis leads to massive opportunity.
