What's happening

Shares of Chinese electric-car maker NIO (NYSE:NIO) were down sharply on Wednesday morning after the company reported a fourth-quarter loss that was worse than expected and disclosed that it had run very short of cash at the end of 2019.

As of 11:30 a.m. EDT, NIO's American depositary receipts were down about 20.3% from Tuesday's closing price.

So what

Under the circumstances, NIO's fourth-quarter earnings weren't awful. The company managed to reduce its operating loss from the year-ago period and increase deliveries despite a very soft market for new vehicles in China during the period. 

A blue NIO ES8, an upscale seven-passenger electric SUV.

A NIO ES8. Image source: NIO.

Wall Street analysts had expected a lower loss, given that NIO had managed decent sales. But what got investors' attention was the company's eye-opening cash number: just $161.7 million as of Dec. 31.

That NIO had been close to running out of cash was no surprise to those who have been watching the company closely, but it was still a stark number to see in print. The company has raised $435 million since the beginning of 2020 and is thought to be out of urgent danger, but it's still operating on a slim safety margin.

Now what

NIO is working to secure longer-term financing from a Chinese city in exchange for moving its headquarters to the city and building a factory there. Until that happens, the company is living month to month as best it can while working to recover from the impact of the coronavirus outbreak earlier this year.

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