On April 29, Nio (NYSE:NIO) announced that it had secured $1 billion in funding to carry on building electric vehicles. Nio stock jumped 8% on the news. However, shares have been sideways ever since.Source: Sundry Photography / Shutterstock.com Is there something holding back investor enthusiasm for the funding arrangement? You better believe it. Here's the breakdown. 75% of What?Three companies are investing in Nio: Hefei City Construction and Investment Holding, CMG-SDIC Capital, and Anhui Provincial Emerging Industry Investment. They are collectively investing 7 billion yuan, or approximately $1 billion, into the company.InvestorPlace – Stock Market News, Stock Advice & Trading TipsThe trickier part of the arrangement is that the investment is going into a newly established company, Nio China.As part of the investment, Nio will transfer its Chinese assets (valued at approximately 17.77 billion yuan or $2.5 billion) into the new company as well as 4.26 billion yuan ($600 million) cash in exchange for 75.9% of the business. The three investors will hold the remaining 24.1% of Nio China. The deal is expected to close by the end of June.The $2.5 billion asset contribution is valued at 85% of Nio's average market value of the 30 trading days preceding April 21. What About Debt?Simple enough. But those numbers don't include debt.Nio had $1.16 billion in short- and long-term debt at the end of December. It also had current and long-term operating lease liabilities of $317 million, bringing total debt to $1.48 billion. Add in the $200 million in short-term convertible notes it raised in February and another $235 million in April and you get to a total debt of $1.92 billion.Based on a market capitalization of $3.62 billion and $574.8 million ($139.8 million on the balance sheet plus $435 million in cash for new debt), Nio has an enterprise value of approximately $5 billion.Nowhere in the company's press release about the $1 billion investment in Nio China does it say anything about the debt.Kudos to The Motley Fool's John Rosevear for pointing this out recently:"That all seems well and good, but NIO has yet to clarify why it's using this structure for the deal, what will happen to its assets outside of China, and what will happen to the roughly $1 billion in debt that it had as of the end of 2019 — all very important questions from an American investor's perspective."Are we to assume that Nio's non-Chinese assets are worth approximately $543 million ($3.62 billion market cap times 15%) because the investment agreement valued Nio's asset transferred to Nio China at 85% of market value? What Does This Mean for NIO Stock?What are Nio shareholders getting for their 75.9% stake in Nio China? That's a good question.Based on 85% of the assets being transferred to Nio China and an enterprise value for the entire company of $5 billion, my back-of-the-napkin calculation would be $3.23 billion for its stake in Nio China (75.9% of $4.25 billion, which is 85% of $5 billion). Add in the estimated enterprise value of $750 million for 100% of the non-Chinese part of its business, and you get $4 billion.Add in the $1 billion investment and you're back to a $5 billion enterprise value.As far as I can tell, the deal was structured this way so that if Nio can make a go of it outside China, its existing investors will benefit from that success, while the new investors are merely hoping to make its business in China a success.Did the company pay too high a price for that billion dollars in funding?On April 29, in addition to announcing its $1 billion investment, it also notified investors that it would have to delay filing its 20-F to incorporate the details from this investment. Nio is expected to file its 20-F soon. We'll know more then.Nio needed the money. Both parties gave up something to get something. Often, those are the best kind of transactions.Will Ashworth has written about investments full-time since 2008. Publications where he's appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities. More From InvestorPlace * Top Stock Picker Reveals His Next 1,000% Winner * America's Richest ZIP Code Holds Shocking Secret * 1 Under-the-Radar 5G Stock to Buy Now * The 1 Stock All Retirees Must Own The post Nio Stock's Newest Backers Are Betting On Chinese Success appeared first on InvestorPlace.

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Boeing (NYSE:BA) has been making headlines for all the wrong reasons over the years, first with the 737 Max jetliner fatalities and subsequent mishandling of the issue, and most recently, the begging for a government bailout. The company added one more, declaring that a major U.S. airliner could go out of business this year. And many investors believe this to be American Airlines (NASDAQ:AAL), casting a dark cloud on AAL stock.Source: GagliardiPhotography / Shutterstock.com To be clear, Boeing CEO Dave Calhoun never mentioned who he was thinking about specifically during an interview with CNBC. But to those reading between the lines, American Airlines looks to have received the dubious honor. As you know, the broader travel industry has been a mess, impacting every corner of the sector. Even as most states have forged a path toward reopening, travelers largely remain rooted at home.Of course, in any fallout, the weakest components are the first to suffer. In this case, several analysts have pointed the spotlight at AAL stock. Let's be real – airliners weren't exactly the most robust investment class prior to the novel coronavirus pandemic. But now, the crisis has exposed every vulnerability.InvestorPlace – Stock Market News, Stock Advice & Trading TipsFundamentally, American Airlines is burning cash at an unsustainable rate. In my opinion, you can easily use hyperbolic terms here. In its most recent first-quarter earnings report, AAL suffered a net income loss of $2.24 billion. Its balance sheet is now in the red, suffering a loss of $2.64 billion. * 20 Stocks to Buy If You're Still Betting on America to Thrive Again, rivals such as United Airlines (NASDAQ:UAL) and Delta Air Lines (NYSE:DAL) don't necessarily inspire the most confidence. But neither organization has a negative balance sheet. Thus, it's likely that AAL stock would be the odd man out. The Loss of AAL Stock Would Only Be a Pyrrhic VictoryIn a cynical sense, should American Airlines implode, it would ordinarily represent an opportunity for the other, relatively well-heeled airliners. Back in the early 1990s, for instance, the nostalgic airline brand Pan Am found itself in federal bankruptcy court. After a fierce battle, which included United, American and defunct companies Trans World Airlines and Northwest Airlines, the court granted Delta rights to Pan Am's transatlantic service.Essentially, Pan Am's assets were incredibly valuable to almost every major airliner because they could pick up pieces of the once iconic firm for pennies on the dollar. But what makes this present crisis unique is that few will be eager to adopt such a speculative growth strategy.In other words, it doesn't really matter whether AAL stock fades into the darkness. What we really should be concerned about is how many of the airliners will still be flying.I'm almost tempted to say that the airliner industry represents one of the greatest shorting opportunities ever. That's because a sharp disconnect still exists between the industry's market value and what's really over the horizon.According to Boeing chief exec Calhoun, "Traffic levels will not be back to 100%. They won't even be back to 25% [by September]… Maybe by the end of the year we approach 50%. So there will definitely be adjustments that will be have to be made on the part of the airlines."If that's the case, AAL stock is not the only stock we should be worried about. Before the coronavirus disrupted everything, industry experts forecasted that global air traffic volumes, though positive, would decline relative to the highs of 2017.Part of the reason is sluggish economic growth which has now turned into a disaster. Deflationary Environment to Hurt All PlayersIf that wasn't enough to get you airsick, consider that the consumer is probably not ready to fly. I'm not just talking about the obvious health implications. Rather, the financial situation for millions of Americans simply do not justify travel and vacationing.As you've heard, the latest jobless claims number neared three million initial filings. Since the crisis began, the total number of people filing for unemployment benefits have totaled over 36 million. It's an absolutely stupid figure that even hardened analysts cannot comprehend.Not surprisingly, 40% of Americans who have been fortunate enough to receive their coronavirus stimulus checks have chosen to save their funds. Personally, it's the wisest decision you could make. But on a collective level, this is exactly what the government didn't want.After all, our economy is mostly driven by consumption. What happens when people don't consume?It's a similar line of inquiry against AAL stock. Yes, American Airlines might fail. But how long can everyone else last if nobody wants to fly?A former senior business analyst for Sony Electronics, Josh Enomoto has helped broker major contracts with Fortune Global 500 companies. Over the past several years, he has delivered unique, critical insights for the investment markets, as well as various other industries including legal, construction management, and healthcare. As of this writing, he did not hold a position in any of the aforementioned securities. More From InvestorPlace * Top Stock Picker Reveals His Next 1,000% Winner * America's Richest ZIP Code Holds Shocking Secret * 1 Under-the-Radar 5G Stock to Buy Now * The 1 Stock All Retirees Must Own The post American Airlines Could Crash, But Is It the Only One? appeared first on InvestorPlace.

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