Nio has recently gone through a minor turmoil in the stock market. The American Depositary Shares (ADS) of the Chinese electric vehicle manufacturer Nio fell nearly 11% today, before slightly recovering, but as of 11:43 AM Eastern Time, the decline was still 9.5%. Why? Because the company announced a new round of capital raising.

Nio's choice to raise funds at this time is certainly due to the opportunity brought by the recent rise in stock prices. They plan to raise 1 billion USD for a stock issuance. This news has caused many shareholders to fall into worries about being "diluted."

To be honest, Nio showcased impressive delivery results last month - they set a record of 31,305 electric vehicles delivered in August. Notably, Nio's new brands Onvo and Firefly have attracted a lot of attention, targeting consumers that are more oriented towards the mass market, rather than the traditional customer base of Nio's models.

This impressive achievement did not disappoint investors. Before the delivery report and the second quarter report released on September 2, shareholders were already optimistic about Nio's performance, pushing the stock price up by 30%. However, today's stock price fall has left people feeling disheartened.

However, Nio's latest fundraising round is intentional. The funds will be used for research and development of core technologies for smart electric vehicles, developing future technology platforms and models, expanding its battery swapping and charging network, strengthening the company's balance sheet, and completing some routine corporate affairs.

Of course, shareholders have to face the dilution effect brought by the newly issued shares. Nio plans to issue new shares at a price of $5.57 per ADS, which is significantly lower than yesterday's closing price of $6.28. The company seems to have chosen a somewhat painful but worthwhile long-term path, as the net loss reported by the company in the second quarter was nearly $700 million. However, with the increase in sales of the new brand, the financial situation may improve, and the newly raised funds will help bolster its cash reserves.

What do you think about Nio's recent actions? Is it worth enduring short-term pain for long-term gain? Leave a comment and let's chat!