- Company Name
- NIO Inc.
- Stock Symbol
- Class Period
- September 12, 2018 to March 5, 2019
- Motion Deadline
- May 11, 2019
- Eastern District of New York
The complaint charges NIO and certain of its officers with violations of the Securities Exchange Act of 1934. NIO designs, manufactures and sells electric vehicles in China, the United States, Germany and the United Kingdom. The Company delivered its first volume-manufactured electric vehicle, the seven-seater ES8, an all-aluminum alloy body electric SUV, in December 2017 and started delivering vehicles to customers in June 2018.
The complaint alleges that, contrary to defendants’ representations that sales of the ES8 were growing significantly, reaching 11,348 vehicles for the year ended December 31, 2018, and that the Company was experiencing “solid ramp-up in production and delivery in 2018, which demonstrated [its] execution capabilities,” by the beginning of the Class Period, the demand for NIO's vehicles was materially declining and the Company was experiencing material adverse trends that were negatively affecting the Company’s sales and revenue. As a result of this adverse information regarding the Company’s business and prospects being withheld from the market, the price of NIO American Depositary Shares (“ADSs”) was artificially inflated during the Class Period to more than $11.50 per share.
Then on March 5, 2019, after the markets closed, NIO released its fourth quarter and full year financial results for the year ended December 31, 2018. NIO disclosed that for January 2019, it had delivered 1,805 ES8s, a decline of over 45% from December 2018, and for February 2019, the Company had delivered 811 ES8s, a decline of over 55% from January 2019 deliveries. Further, the Company stated that it expected to sell between 3,500 and 3,800 ES8s for the quarter ending March 31, 2019 – which represented sales of between 884 and 1,184 ES8s in March 2019, a decline of over 52% from fourth quarter 2018 sales. The Company’s CFO, defendant Louis T. Hsieh, further stated that the trends negatively affecting NIO sales that were experienced in the first quarter of 2019 would continue into the second quarter of 2019, indicating that the material decline in NIO’s ES8 sales went beyond first quarter seasonality: “We expect deliveries in the second quarter of 2019 to reflect continued weakness as we await the result of the 2019 EV subsidy policy in China and improvement in the macroeconomic conditions.”
As a result of this news, on March 6, 2019, the price of NIO ADSs fell to a close of $8.01 per ADS, a decline of $2.01 per ADS, or over 21%, on heavy trading volume of over 73 million ADSs. On March 7, 2019, the price of NIO ADSs declined an additional 11% to close at $7.09 per ADS.