Nio is a Chinese electric vehicle (EV) maker that has come to a lot of attention in recent years as it attempts to create not just cars, but revolutionary charging systems via its battery swap technology.
Nio’s vehicles aren’t available for purchase in the United States quite yet, but they are expanding fast. Additionally, Nio is available for purchase on the U.S. stock market, even if their cars aren’t. Since they’re a part of the stock market, investors (and anyone else) can look at the financial information that the company is putting out each quarter for the SEC (the government organization that regulates the stock market).
Today, we are going to be doing just that: taking a look at Nio’s financials, but specifically learning how much cash on hand they have. Let’s get started!
Here’s How Much Cash Nio Has
Nio is an international company based out of Shanghai, China. Since Nio is listed on U.S.-based stock markets, we can take a look at the company filings in order to see important data and make inferences based on that data.
It’s important to note that Nio posts its quarterly and annual filings on its website, although some of the reports listed on its website are currently unaudited. Still, we will be using these figures, although there could be some discrepancies if there were to be an audit, although it likely wouldn’t change much.
As of September 30th, 2022, Nio has $6.790 billion cash on hand, which is a 6.82% decline from the same period last year (known as year-over-year). What exactly does this mean? As MacroTrends writes, “Cash on hand can be defined as cash deposits at financial institutions that can immediately be withdrawn at any time, and investments maturing in one year or less that are highly liquid and therefore regarded as cash equivalents and reported with or near cash line items.”
Looking at Nio’s financial documents, the numbers are pretty similar. On the far-right column on page 7, we can see that Nio currently has $2.54 billion in cash and cash equivalents and $3.757 billion in short-term investments. In total, this is $6.3 billion, of which the remainder (getting us to the $6.79 billion number above) can be seen in some combination of other outstanding cash assets, likely “Trade and notes receivable” or “Amounts due from related parties.”
Ultimately, the final number depends on what you count as cash, but from the looks of things, MacroTrends and Nio’s financial statements seem to agree it’s something around $6.8 billion.
|Assets||USD (in millions)|
|Cash and cash equivalents||2,541,741|
|Trade and notes receivable||616,294|
|Amounts due from related parties||246,613|
|Prepayments and other current assets||273,405|
A Historical Comparison of Nio and its Cash Reserves
Seeing a number that represents a company’s current cash can tell us a little bit, but understanding the amount of cash in relation to how the company has held cash historically can be even more insightful.
Looking at Nio’s financials, we can see that there have been two recent years in which they have reported less cash on hand than the previous year: 2022 and 2018. Here is that data in a table, starting in 2019:
|Year (Q3)||NIO Cash on Hand||Change from the Previous Year|
What does it mean? Well, it usually is company specific. Generally speaking, companies dip into their cash reserves to pull out large lumps for investments or for other specific purposes, or to pay important debts and bills during tougher times. For Nio, the past year has seen it shed over 60% of its company value, a truly massive percentage.
With the arriving year bringing uncertainty, the fact that Nio is already dipping into its savings could be an issue, but there are a lot of missing contexts that could show more specific reasons as to why Nio isn’t able to save any cash (some good, others bad).
Moving further into 2023, Nio may need to dip into its cash reserves further, depending on what happens. Currently, Nio hasn’t listed a net profit in the past few years, meaning it will have to rely on investor cash flow, or it will need to continue to dip into its cash on hand. Since there is still a total lack of clarity on whether 2023 will mean an end to the current bear market or if it will be the start of a serious recession, Nio’s lack of profit could mean further use of those reserves.
Still, Nio isn’t quite in trouble yet since its annual losses are still quite low compared to how much cash it has on hand. In 2021, for reference, Nio had a net loss of $630.3 million, meaning they could sustain themselves for a little while on their cash, although it wouldn’t be forever.
Nio’s Cash in Context
There is an ever-growing list of EV makers, but how are they all doing in comparison to Nio? Let’s take a look at some other EV makers and how much cash they have on hand, for comparison:
|Company||Cash on Hand (Q3 2022)|
What Companies Could Nio Buy Outright?
With $6.790 billion cash on hand, Nio could potentially buy some other companies outright!
- Nio could purchase Harley-Davidson, which has a market cap of $6.37B.
- Nio could purchase Texas Roadhouse, which has a market cap of $6.47B.
- Nio could purchase WWE (World Wrestling Entertainment), which has a market cap of $6.58B.
- Nio could purchase Levi Strauss, which has a market cap of $6.57B.
Why Does Nio Need Cash Reserves?
A large company like Nio might need cash reserves for a variety of reasons.
For example, cash reserves can provide a financial cushion in case of unexpected expenses or downturns in business. They can also be used to fund new projects or investments or to pay off debts.
In addition, having a healthy cash reserve can improve a company’s credit rating and make it easier to borrow money if needed. Finally, cash reserves can give a company greater flexibility and stability, allowing it to weather economic storms and make strategic decisions without being forced to sell assets or take on additional debt.
Nio’s accumulation of cash could be for any one of these reasons!
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