What happened
Shares of Chinese electric-vehicle maker NIO (NIO 1.50%) opened higher on Monday, after a regulatory filing revealed that Tencent Holdings (TCEHY 3.00%) has boosted its stake in the company.
As of 10:15 a.m. EDT today, NIO's American depositary shares (ADS) were up about 5.5% from Friday's closing price.
So what
In a filing with the Securities and Exchange Commission on Friday, NIO revealed that Tencent Holdings bought 1,680,000 ADS of NIO in its secondary share offering earlier this month, raising its total stake to 15.1% of the company.
Tencent has been an investor in NIO since investing $510 million before its initial public offering in September 2018. The Chinese tech giant and its subsidiaries invested a total of $130 million in NIO's convertible notes in 2019; those notes will convert to shares later this year, in 2022, and in 2024. It also acquired about 141,000 ADS in April 2019 via a distribution from a Sequoia Capital venture fund.
A revamped version of NIO's ES8, with longer range and new technology, hit the market earlier this year. Image source: NIO.
Now what
NIO's shares have risen over 80% in 2020, on growing investor interest in China's electric-vehicle market and following a major investment from economic-development authorities in Anhui province, China's industrial hub, in April.
In light of that dramatic year-to-date run, most Wall Street analysts are urging auto investors to exercise some caution, via hold ratings and price targets that reflect a consensus view that a retracing is likely. One who isn't: Goldman Sachs analyst Fei Fang, who earlier this month raised his rating on NIO to buy, from neutral, with a price target of $6.40.
