What happened

Shares of Nio (NIO 0.25%) were rocked by a short-seller report this morning, with an initial dive of 8%. But the company's response seems to have eased investors' minds, and shares bounced back some by midday. As of 12:45 p.m. ET on Wednesday, Nio stock was still down, but only by 3.4%. 

So what

Nio responded with a sharp denial against the claims made by the Grizzly Research report. Grizzly, which admitted that it and its affiliates hold short positions in the stock, basically said that Nio is improperly booking revenue from its multiyear subscriptions for its battery swap service. That allows customers to spend less up front for a Nio vehicle, and with the subscription, they use battery swap stations to quickly replace drained batteries rather than recharging. 

Grizzly claims, among other things, that Nio has been booking the full seven years' worth of subscription revenue and transferring the burden of collecting the monthly payment to an affiliated company. But Nio hit back today, and helped ease investor concerns, at least for now. 

Now what

In saying the claims are not justified, the company put out a statement that the report "contains numerous errors, unsupported speculations and misleading conclusions and interpretations regarding information relating to the company." Nio added that management, along with its audit committee, will put the allegation under review to determine any appropriate action to protect shareholder interests. 

There was other business-related news today, too, that might have helped ease investor concerns. The stock has had the overhang of COVID-related lockdowns in China in the past several months. But automotive retail sales soared 28% last week versus the comparable period one month ago, according to the China Passenger Car Association. 

Assuming Nio debunks or clarifies the short-seller claims, the business news could become more of a driver for the stock. Investors may want to wait for more details from the automaker, but if the share price remains down, the return of strong demand could provide a good reason to own some Nio shares.