Scared about the affect the SEC plan has on Nio? We will explain why you shouldn't be.
We have gotten a lot of questions recently about Nio, which is why we have decided to write this. We have seen a bit of concern that is completely unnecessary and we would like to help inform the public or give clarification. However please keep in mind that this is only based on our own research and opinions. Luvioni.com is not a registered investment, legal or tax advisor or a broker/dealer. The best source is always yourself by asking Nio questions directly (it is possible on their website).
UPDATE 05/05/2022
Does Nio have until the 25th of May to be compliant? The answer is no, the rest of the blog post is still relevant and hold its ground.
Nio’s delisting risk has decreased and increased in a short amount of time with China regulators becoming more open to sharing company information while on the other hand, US regulators are pounding harder on the Chinese companies, even putting Nio on the high-risk list of demanding evidence to dispute being provisionally identified as a Commission Identified USSuer under the HFCAA by 25th of May 2022. Making it that Nio has until May 25th to drastically reduce its risk of delisting, making the date a huge positive or negative turning point for Nio.
- The number one reason to not even care is that nothing has happened yet.
- Nio can still be able to comply with the American auditing standards in time. They have 3 years time to arrange all of this. THREE WHOLE YEARS.
- If Nio cannot comply with the American auditing standards and it gets Delisted from the NYSE, it will just go to the OTC (over the counter market).
- Nio being on OTC will filter out the majority of the amateurs that are less experienced traders and gamblers, as some brokers don’t work with OTC and not a lot of people, understand it.
- Institutional investors (the big boys) might become happy with this as having less retail (investors) will make the share less volatile.
- Nio is not only listed on an American stock exchange, which in this case is NYSE.
- Nio is also already listed on the German, United Kingdom and Mexican stock exchange.
- Nio can simply list its shares on other exchanges, including China.
- Depending on your broker and country regulations, you are able to move your shares to another exchange.
The Nio ''list'' people are talking about
We will be sharing the lists you should keep an eye on (for the next 3 years if this is really your concern).
The most import list being: Public Companies that are Audit Clients of PCAOB-Registered Firms from Non-U.S. Jurisdictions where the PCAOB is Denied Access to Conduct Inspections. You can click on the link or you can look for it yourself on their official website of pcaobus.org.
As you can see by clicking on the link and picture below, Nio is seen on this list, however, their auditor is a world-renowned accredited auditor called PWC ( Price Waterhouse Coopers) which even have their own department of Fraud risk investigations & management. Nio can simply solve this issue by allowing PCAOB to inspect their auditing (done by an official U.S. regulator.
This is caused by ”Positions taken by Chinese authorities impede our ability to oversee PCAOB-registered audit firms in mainland China and Hong Kong. Specifically, these positions currently impair our ability to conduct inspections of the audits of public companies with China-based operations.” However China is not the only country that has taken this position, countries like Belgium and France have this as well.
If you want to check all the auditing standards click here.
So what are the possible resolutions?
- The U.S. can drop this demand, which is ok but not smart long term. This new regulation can ”help” prevent fraud in the future and give U.S. investors more confidence and trust in the company they invest in, making it actually positive for both sides. We put ”help” prevent fraud because just because a U.S. regulator controls the auditing doesn’t magically make the company fraudless, there have been enough fraudulent companies in the U.S. alone. It may also send a negative message indirectly to China saying that they do not trust their auditing regulators, but you could also make the argument as to why China should trust U.S. regulators ( especially with the U.S. voting situations at the moment). But all in all, this can be positive for both countries, the Nio company is listed on American soil and has plans to enter the U.S. market so this shouldn’t be a big deal so this will give more transparency and trust.
- Nio will simply allow an official U.S. regulator to inspect the audits, this can be easily arranged as they have a working relationship with Price Waterhouse Coopers.
- China will make some exceptions as to which companies will be allowed to be inspected, in this case, fast-growing and popular companies like Nio or Xpeng.
- Nio already has offices in the United States and Europe as they have intent and near-future plans to be operational internationally (Europe and U.S.), this will make them not only a China-based operational company but a U.S. and European one. Making them more transparent for the public and investors. Having Nio cars driving around in the U.S. and Europe will also give investors a piece of mind.
If you want to follow Nio’s filings and actions when they are not making a social media post or post on their website you can always follow the SEC filings here. You can also go to the official SEC government website by clicking here and also see the Nio company filings by clicking here
As you can see here below. the Nio Auditor Pricewaterhouse Coopers (PwC) Zhon Tian LLP is registered on the PCAOB ( Public Company Accounting Oversight Board), which can be argued (if agreed to by the U.S. regulators) that it is reason enough that the new law will be irrelevant to Nio. If this is the case, then Nio does not need a U.S. regulator to inspect their audits because their auditor is already registered at PCAOB. With this being said, one must take in all the other factors into account.
Other lists that are also relevant
- NYSE ”Noncompliant Issuers” list is also a nice list to follow, Nio is not on this list as it is still compliant. Click here to go to the list.
- DOD Releases List of Additional Companies, in Accordance with Section 1237 of FY99 NDAA. Nio or other electric car manufacturers are not on this list.
- Have a list that is relevant and you don’t see it here? submit it in the comments below or send a mail to contact@luvioni.com.
The bill that can potentially affect Nio if it becomes a law ( S.945 - Holding Foreign Companies Accountable Act)
The picture you see below is the potential law people are talking about that can be the cause to delist Nio from the NYSE (New York Stock Exchange) within 3 years after it becomes a law. At the moment it is not a law and we encourage you to click on this link or photo below to get the reliable trustworthy update from the official congress.gov website.
When and it if does become a law, no immediate action will be taken as Nio has 3 years to be compliant in order to stay listed on the NYSE exchange. The best way to know for sure if Nio is compliant and is to be remained listed is to either wait for an official Nio update or check the official pcaobus.org website to see if Nio is still on the list, if Nio is still on this list after three years, this means they will be delisted from the NYSE (New York Stock Exchange). The last time this list updated was on the first of July 2020. This means that Nio might be removed the PCAOB list (meaning getting the confirmation they will not be delisted from the NYSE) as early as the start of next year when they release their annual report or earlier if they decide to make an SEC filing. A similar company named Xiaopeng Motors (Xpeng) is not on the PCAOB list meaning it is already confirmed that they will not be delisted.
However do keep in mind that if Nio is still on the PCAOB by the end of next year it does not mean they will be delisted from the NYSE (New York Stock Exchange), they have until the start of 2024 to be removed from the PCAOB list. However to prevent losing consumer trust they might try to arrange this as early as possible just like Xpeng, as Xpeng has the same auditor as Nio, PricewaterhouseCoopers Zhong Tian LLP or also known as PwC. PwC is also known for being the auditor of Tesla motors.
What can you do if Nio gets delisted from the NYSE
- Do nothing. Nothing has even happened yet so it is always better to wait until Nio officially makes a statement as to what actions it will take. The delisting would also only be relevant in 3 years, at which the chance of delisting would be a minimum as Nio has enjoyed being listed on the NYSE for obvious reasons.
- Wait untill it gets put back on the NYSE or NASDAQ. (New York Stock Exchange & National Association of Securities Dealers Automated Quotations)
- If you want to buy more shares, buy it via the OTC market. (Over The Counter)
- Move your shares to the German market, FWB or SWB. (Frankfurt Stock Exchange & Stuttgart Stock Exchange)
- Move your shares to the Mexican market, BMV. (Bolsa Mexicana de Valores)
- Move your shares to the United Kingdom/ English market, LSE (London Stock Exchange)
- Move your shares to the Hong Kong/ Chinese market, HKEX (Hong Kong Stock Exchange)
- Move your shares the new stock exchange Nio will most likely announce if it does happen.
Will this affect the fundamentals of the company?
For the people that read up untill now, congratulations! We will be sharing an update directly from Nio regarding this situation. So we will be posting what Nio will do about this, so then you know with a 100% certainty what action is best for you. So, subscribe or revisit our website in the near future to get the update!
Do not forget that companies like Nio will be worth more than at least 2 trillion euros within 10 years, with their self-driving capabilities, battery services, charging services, charging network, subscriptions, Nio houses, Nio houses services etc. Tesla will be worth more than at least 10 trillion within 10 years, which is one of the reasons China allowed Tesla to have its facilities there, Having an electric car company worth this much, will be of course record-breaking and the Chinese auto manufacturers will follow, especially a company so well supported and different as Nio. We understand these numbers might seem crazy but we are doing extensive research to try to explain this as simple as possible in an upcoming blog.
If you see something wrong or have any feedback (it can even be compliments) just leave it in the comments below or send us a mail at contact@luvion.com or donate with a message at our paypal.me.
