- NIO stock is lower in Hong Kong as SEC may delist it.
- The Chinese EV automaker shares down 4% in premarket on Thursday after rising on Wednesday.
- NIO Inc is still high-risk early stage and this adds more uncertainty.
NIO stock is once again under pressure as the SEC has added it to its delisting list. “Delisting list” is a bit of a tongue twister and it is certainly putting investors in a stick-or-twist situation just when hopes for a possible detente between Chinese and US securities regulators had been growing. This latest development just adds further confusion to the Chinese ADR sector and is likely to lead to another rush to the exits from US investors.
This malaise has been ongoing ever since the pulled Ant Group IPO, then came the DIDI debacle, and now the potential for multiple delistings of Chinese stocks.
NIO stock news: Nio fighting to avoid US delisting
NIO has pledged to keep working with both Chinese and US regulators as the company said it will aim to keep its dual listings in New York and Hong Kong. The Chinese electric vehicle constructor statement reads like this:
“NIO is aware that the Company has been provisionally identified by the SEC under the HFCAA on May 4, 2022 U.S. Eastern Time. The Company understands such identification may result from its filing of the annual report on Form 20-F for the fiscal year ended December 31, 2021… NIO has been actively exploring possible solutions to protect the interest of its stakeholders. On March 10, 2022, the Company completed a secondary listing of its Class A ordinary shares on the Main Board of the Hong Kong Stock Exchange (the “HKEX”) under the stock code “9866.” The Class A ordinary shares listed on the HKEX are fully fungible with the ADSs listed on the NYSE”…NIO will continue to comply with applicable laws and regulations in both China and the United States, and strive to maintain its listing status on both the NYSE and the HKEX in compliance with applicable listing rules.
This is not exactly reassuring in our view. Nio Inc. says it has been exploring solutions such as listing in Hong Kong. Fine, but that solution does not help US investors. While NIO says it will strive to maintain its listing on the NYSE it outlines no plans on how to achieve this. A tacit admission perhaps that it has no control over the situation in reality. This is at a higher level and is a political decision between the US and China. Again nothing to comfort US investors.
NIO stock forecast: Wait-and-see until US-China standoff settles
Nothing to do here but exit and stick to the sidelines in our view. If the situation gets resolved then NIO stock should recover and investors will have ample opportunity and likely cheaper prices to reenter and buy NIO shares, but this may drag on. With the global political situation in turmoil and China attempting to walk a fine line between Russia and the US, this decision will take time.
The updated SEC list included some other retail favorites like Pinduoduo (PDD), JD.com (JD), XPeng (XPEV), and others, amounting to 88 in total. Expect losses on Thursday for those names.
NIO stock chart, daily
* The author is long Alibaba.