Tesla of China: Nio is getting slammed

People gather around the Nio EP9 electric car displayed, at the Shanghai Auto Show, during its media day, in Shanghai, China April 19, 2017.REUTERS/Aly Song

• Nio shares dropped 12% Monday amid trade tensions.
• The Chinese electric-car startup debuted for trading in the US on Wednesday, and surged 75% on Thursday.
• Nio is not the only recently-listed Chinese startups that experienced big gains last week.
• Watch Nio trade in real time here.

Nio, known as the Tesla of China, dropped 12% Monday after debuting on US markets last week.

Shares had a disappointing debut on Wednesday after the Chinese electric-car maker priced at $6.26, the low end of its range, raising $1 billion. The electric-car maker had hoped to raise $1.8 billion.

The next day, shares soared 75%, trading above $12 — despite Bernstein analyst Robin Zhu assigning an “underperform” rating and saying he thanks a capital raise is coming in the next 12 to 18 months.

But the surge didn’t last long as Nio shares came under pressure on Friday, after a Bloomberg report said  President Donald Trump getting ready to hit $200 billion worth of Chinese goods with tariffs — despite the two sides attempting to extend trade talks. 

Nio, backed by Chinese tech giant Tencent, was founded by William Li in November 2014 as NextCar and changed its name in July 2017. Nio’s public fundraising shows China’s ambition to become a dominant global electric-vehicle producer as the nation bids to reduce vehicle emissions, produce high-tech industries, and compete with the likes of Tesla and other electric-car makers, Reuters says. 

Nio is not the only recently-listed Chinese startup to experience big gains last week. Qutoutiao, a Chinese news aggregation app also backed by Tencent, started trading in the US on Friday, surging 126%. 

Recently US-listed Chinese initial public offerings all have a relatively small market float, and can therefore be easily pushed up or down with only small amount of trading, according to the South China Morning Post, citing analysts.

“The extremely large swings indicate at least some speculative activities,” Wang Guanxiong, a Beijing-based investor, told the South China Morning Post.

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