NIO (NYSE:NIO) Soars on $2.2B Strategic Investment from CYVN

Shares of Chinese EV maker NIO (NYSE:NIO) surged nearly 10% in the early session today after CYVN Holdings agreed to infuse $2.2 billion into the company. CYVN is an Abu Dhabi-based specialist investment vehicle with a focus on smart and advanced mobility solutions.

Under the share subscription agreement, an affiliate of CYVN will subscribe to nearly 294 million newly issued NIO shares at $7.50 per share. Earlier this year, CYVN made a strategic equity investment of $738.5 million in NIO. Additionally, it acquired certain NIO shares from an affiliate of Tencent Holdings (OTC:TCEHY) for about $350 million. Following today’s deal, CYVN will hold a nearly 20.1% stake in NIO.

The latest liquidity injection from CYVN is anticipated to close in the final week of this month. Following closure, CYVN can nominate two directors to NIO’s Board. Further, the two companies, along with their affiliates, plan to pursue strategic and technology collaborations in international markets.

William Bin Li, the Founder, Chairman, and CEO of NIO, remarked, “With the enhanced balance sheet, NIO is well prepared to sharpen brand positioning, bolster sales and service capabilities, and make long-term investment in core technologies to navigate the intensifying competitive landscape, while continually improving execution efficiency and system capabilities.”

NIO plans to launch its Firefly and Alps brands in Europe over the coming periods. The EV producer has been consistently churning out losses. The $2.2 billion investment follows its recent announcement of a 10% headcount trim. In the most recent quarter, its net loss increased by 10.8% year-over-year to $624.6 million.

What Is the Future Price of NIO Stock?

Today’s price gains come after a nearly 33% drop in NIO shares over the past year. Overall, the Street has a Moderate Buy consensus rating on NIO, and the average NIO price target of $11.02 implies a 38.1% potential upside in the stock.

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