Why Investors Should Not Expect a Recovery for NIO Stock
Amid the COVID-19 pandemic, a sign of hope just emerged for NIO (NYSE: NIO) stock. Faced with mounting losses, the maker of electric vehicles (EVs) had struggled to gain traction in better conditions. Also, with its current funding nearly exhausted, the company needed a cash infusion quickly. Fortunately, NIO just secured 7 billion renminbi ($989 million) worth of backing from an investment group.
However, with massive financial losses set to continue and a harsh competitive landscape with which to contend, NIO stock may only see a limited benefit from this investment.
The latest investment involves several investors, many based in the Chinese city of Hefei. This comes only two months after the Feb. 25 announcement that NIO had entered into a collaboration framework agreement with the Hefei Municipal Government. The deal creates a new firm called NIO China, where the current NIO will place its core assets and business. With a more permanent agreement in place, NIO will move its headquarters to Hefei, expand operations, and strengthen its relationship with local partners in the area. Current NIO shareholders will own 75.9% of the new firm created with this agreement, with outside investors holding the remainder.
Source Fool.com
