NEWS:
New Debt, New Woes: Nio Raises $1 Billion, Shares Tumble by 17% Amid Financial Struggles
– Nio announces plans to raise $1 billion in new debt through the issuance of convertible senior notes, leading to a 17% drop in its share price.
– The new debt will consist of $500 million worth of convertible senior notes due in 2029 and another $500 million due in 2030. An overallotment option could increase total new debt to $1.15 billion.
– The move comes after Nio reported financial losses of $2.1 billion and a negative free cash flow of $1.6 billion in the previous year.
– S&P Global Market Intelligence predicts Nio will not achieve profitability until 2027.
– Funds from the new debt issuance will partially be used to pay off existing debt and to strengthen the balance sheet.
– The company’s strategy doesn’t address the core issue of profitability, leading to concerns about future debt offerings and market sell-offs.
CHART ANALYSIS:
– NIO’s $10.18 support level has held as strong support since August 25, but the recent bearish news has broke this support level.
– I have my eyes on $7.53 as a key price level that aligns with the green trend line and lower end of my buy zone. The lower end of the Bollinger Band is currently sitting near this price level as well.
– I think there could be a dip or wicks below the green support level for the best buying opportunity there.
TradingView Chart:
https://www.tradingview.com/chart/NIO/FprQInsR-NIO-s-7-53-price-target-after-1-billion-debt-leads-to-17-drop/
