Nio Slids as Citi Sees Holes in Funding Deal

By Yasin Ebrahim

Investing.com – Nio failed to partake in the broad-based rally on Monday after an analyst on Wall Street warned the Chinese electric automaker’s recent funding deal could prove short-term relief but longer-term pain should sales weakness continue.

Citigroup (NYSE:) cut its price target on Nio (NYSE:) to neutral from buy and lowered its price target on the stock to $4.30 from $6.80, sending shares down 3%.

Nio last week secured a financial lifeline after clinching a funding deal with the city of Hefei in China. But the deal will require the company to invest in building a new headquarters, which could throw the company back into financial trouble if sales don’t pick up, Citi warned.

“While the deal will ease (near-term) cash flow pressure on Nio, the collaboration will require Nio to spend a portion of the cash injection on the headquarters move, which may put the company under more pressure in case of prolonged sales weakness.”

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