Nio Stock Dips After Short-Seller Attack: Should You Worry?

Nio (NYSE: NIO) stock is down this week after a short-seller attack.

It's typical for a stock to fall when a short-seller accuses a company of any wrongdoing. In Nio's case, Grizzly Research alleges the electric vehicle (EV) manufacturer used an "audacious scheme" to inflate its revenue and profitability, even likening it to the Valeant Pharmaceuticals scandal in which the company was found guilty of using related-party transactions to boost sales.

The third party that Grizzly Research is referring to is linked to Nio's popular battery program, which is a major competitive advantage. Needless to say, investors are worried. On Wednesday, Nio stock fell about 11% on both the Hong Kong and Singapore stock exchanges (before ticking up today), and it opened the U.S. market deep in the red before recovering to a dip of about 2%.

Source Fool.com