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Shares of Tesla rival Nio rebounded in early trading Thursday, a day after the Chinese electric vehicle maker denied short-seller claims of inflated revenue and margins that sent its stock price plummeting. stock.

Hong Kong-listed Nio shares rose 4.3%, well ahead of gains in the city’s benchmark Hang Seng index of 0.4%.

The market marked an improvement from Wednesday, when the stock fell more than 11% as investors reacted to allegations by short seller Grizzly Research.

The research group said in a report that the Shanghai-based automaker, through its partly-owned battery-swap joint venture Wuhan Weineng, inflated both revenue and profit by “flooding” Weineng with additional batteries.

In response, Nio said the report was “unsubstantiated and contains numerous errors, unsubstantiated speculation, and misleading conclusions and interpretations.”

The company added that its business had undergone due diligence as part of the Hong Kong stock exchange listing process and regular auditing of its financial statements.

Analysts at Citi, the US bank, said the market appears to be “primarily concerned” about an apparent gap between users and the battery inventory ratio at Weineng. “We expect more clarity on this from Nio,” the analysts said.

Nio was founded in 2014 and survived a cash crunch in 2019 after securing an injection of nearly $1 billion from state-backed investors in early 2020.

The company has been banking on selling its battery-swap technology to other groups to accelerate adoption of the system and expand the market as it tries to capture a portion of the rapidly growing electric vehicle market.

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