NIO Inc. (NIO) Accused of Inflating Its IPO Price

According to the complaint for alleged violations of the Securities and Exchange Act of 1933 based on alleged misrepresentations related to the company's September 2018 initial public offering ("IPO"), offering 160 million American Depository Shares ("ADSs") at $6.26 per share, for over $1 billion in total proceeds. According to the Registration Statement, NIO intended to use 25% of the proceeds of the IPO to develop a manufacturing facility and roll out its supply chain. The intended effect would be a significant decrease in manufacturing costs and less reliance on Chinese government-owned JAC Auto. The Registration Statement also touted NIO's mobile app, indicating "over 520,000 registered users as of August 28, 2018." The complaint asserts that these allegations were misleading. Specifically, on March 5, 2019, NIO revealed it was no longer building its own manufacturing plant and would continue to rely on JAC Auto, causing NIO's ADSs to close down over 30% over two trading days. Then, on April 2, 2019, NIO revealed it only had "190,000 active users on peak days in 2018." The stock steadily declined following this announcement, and currently trades at just $2.76.