Nio says short sellers’ claims of padded sales are ‘baseless’

(Bloomberg) — Nio Inc. dismissed a short seller’s claim that the electric car maker inflated its revenue, saying the report contains “numerous errors.”

Short seller Grizzly Research released a report alleging Nio used battery sales to a related party to inflate revenue and increase margins, concluding the company was backed by ‘financial shenanigans’ and was littered of red flags when it comes to corporate governance.

“The report is baseless and contains numerous errors, unsubstantiated speculation and misleading conclusions,” Shanghai-based Nio said in a statement on Wednesday. The board is reviewing the allegations and considering the appropriate course of action to protect shareholders’ interests, the EV company added.

Nio shares fell 11.6% in Hong Kong on Wednesday, the biggest intraday decline since May 10, trimming their gain this year to 4.2%. Its U.S.-traded shares fell 2.6% on Tuesday but are up nearly 30% this month.

Grizzly Research did not immediately respond to a phone call and email outside of normal US business hours.

Among other notable targets, Grizzly Research questioned the results of Chinese online education company GSX Techedu Inc., one of the stocks at the center of the collapse of Bill Hwang’s Archegos Capital Management, the calling it the “worst publicly traded education company”.

The short seller also posted negative reports on other China-linked companies, including ReneSola Ltd. and self-driving technology developer TuSimple Holdings Inc., which it said was an “empty box well-wrapped and irresponsibly thrown at US investors.” The stock has plunged 80% since the report was released in August last year.

(Adds more Grizzly Research targets.)

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Sallie R. Loera