(Yicai) Sept. 11 -- Nio’s shares tumbled after the Chinese electric vehicle startup raised USD1 billion from a second discounted share sale this year -- priced following a strong rally in its stock price -- so as to fund new model development as the business pushes to become profitable next quarter.

Nio [HKG: 9866] closed 1.8 percent lower at HKD45.90 (USD5.89) a share in Hong Kong today, after its New York-listed stock [NASDAQ: NIO] slumped 8.9 percent to USD5.72 yesterday. The firm’s H-shares had surged more than 80 percent from July 9 through Sept. 9, while its American Depositary Receipts had surged over 70 percent.

Nio sold just over 181.8 million class A ordinary shares priced at USD5.57 per ADR, or HKD43.36 per ordinary share, the Shanghai-based company announced yesterday. That was an 11.3 percent discount on its Sept. 9 closing price in New York of USD6.28.

A softer share price following a stock offering is not uncommon, as the additional shares issued dilute existing shareholder equity, often leading to a perceived loss of value in their holdings and triggering a near-term sell-off.

The proceeds of the sale will be used to research and develop smart EV technologies, develop technology platforms and models across Nio's brands, expand the firm's battery swapping and charging network, and strengthen the balance sheet, it said.

Nio named Morgan Stanley Asia, UBS Securities, UBS' Hong Kong branch, and Deutsche Bank as underwriters, granting them a 30-day option to purchase up to an additional 27.3 million ADS, the carmaker noted.

In March, Nio raised HKD4 billion (USD514.4 million) from the discounted sale of 136.8 million Class A ordinary shares priced at HKD29.46 apiece. Its stock tumbled to the lowest level this year in the following days, sinking to USD3.02 in New York and HKD23.70 in Hong Kong.

Nio has not turned a profit since its was set up in 2014. Its net loss narrowed 1 percent to CNY5 billion (USD697.2 million) in the three months ended June 30 from a year earlier, while revenue jumped 9 percent to CNY19 billion (USD2.7 billion), the firm’s earnings report showed on Sept. 2. Vehicle deliveries surged 26 percent to 72,056 units. 

But Nio was bullish on this quarter thanks to strong demand for the All-New ES8, a six-to-seven-seat luxury sport utility vehicle, and the similar but cheaper L90, released by its sub-brand Onvo.

“The strong market reception of the Onvo L90 and the Nio All-New ES8 has reinforced our overall sales momentum,” said William Li, founder, chairman, and chief executive officer of Nio. The carmaker expects to deliver between 87,000 and 91,000 vehicles this quarter, up 41 percent to 47 percent from a year earlier, to set a new company record, he added.

For this quarter, Nio expects revenue to rise 17 percent to 23 percent to between CNY21.8 billion and CNY22.9 billion from a year ago, Li noted, adding that the goal is to achieve its first profit based on non-generally accepted accounting principles in the fourth quarter.

Editors: Dou Shicong, Martin Kadiev