Based on the latest news with Nio (NYSE:NIO), apparently it’s not just retail speculators that are bullish on NIO stock.

As announced this week, CYVN Holdings, an investment vehicle majority-owned by the Government of Abu Dhabi, is becoming a major investor in the China-based electric vehicle company.

I believe this big investor is making a big mistake. There is a high chance that the oil-rich United Arab Emirates component will ultimately take a loss on its $738.5 million position.

At least, based on the future prospects for the company. With this, it goes without saying this stock remains a bad bet for everyday investors as well.

While this development adds little to the bear case, it adds nothing to the bull case, either. This makes it wise to ignore this news completely and stay away.

NIO Stock and CYVN’s Capital Infusion

Related to concerns about the early-stage company’s move to profitability, there have been concerns whether Nio has enough cash on hand to sustain losses and fund the company’s continued growth.

For now, these concerns may be easing somewhat, with CYVN’s aforementioned investment in the EV maker. That said, based on how NIO stock has performed since the CYVN news hit the wires on June 20, it’s clear that the market, like myself, views this as a wash overall for shares.

Why is this news largely a non-factor for Nio going forward? While this transaction is dilutive to existing investors, the extent of the dilution is minimal.

The investment fund’s purchase of 85 million newly-issued shares represents dilution of around 5.1%, given that Nio’s outstanding share count currently stands at 1.67 billion.

However, at the same time this financing deal is only going to have a modest dilutive impact, the capital infusion is relatively small. $738.5 million only moderately increases Nio’s war chest ($4.75 billion).

While this additional cash gives the company more expansion bandwidth, it’s still questionable whether its big production ramp-up will translate into re-accelerated growth in-line or above current expectations.

Nearer-Term Negatives

Outweigh Silver Linings

Admittedly, there may be some reasons besides capital growth behind CYVN’s decision to buy NIO stock. Abu Dhabi may be investing in Nio as part of larger-scale plans to diversify away from oil. As you may know, Saudi Arabia has made a big EV investment for a similar reason.

More pertinent to all shareholders, both CYVN and Nio plan to “jointly pursue opportunities in Nio’s international business,” as stated in the deal announcement press release. This could mean CYVN may down the road invest in ventures that enable Nio (based in China, and now expanding into Europe) to enter other large markets, such as the United States.

But while these silver linings suggest some positives could eventually come about from this deal, negatives in the near-term are far more likely to outweigh them. Namely, as I have argued in past coverage, there is a strong chance shares fall significantly lower by year’s end.

Why? Either high competition will prevent a “growth resurgence” from panning out, or the company will (through vehicle price cuts) manage to increase monthly deliveries, but at the expense of margins. Shares as a result will get de-rated, due to investor disappointment.

Bottom Line: Continue to Avoid

The emergence of Abu Dhabi as a Nio shareholder may be headline-worthy. Down the road, their involvement could become more of a factor in the overall Nio story.

Again though, this news (for now) should have zero impact on decision to buy/sell/avoid NIO shares.

Instead, what matters more is whether monthly delivery numbers and quarterly results between now and December live up to the high expectations set by Nio’s management.

The first such “moment of truth” will arrive at the start of next month. That’s when Nio’s June delivery numbers will be released.

These numbers will give us a better idea whether the “growth resurgence” is taking shape. Or, if Nio, as it has done many times in the past, is again over-promising and under-delivering.

Until then, prospects overall remain highly uncertain, so continue to avoid NIO stock.

NIO stock earns a D rating in Portfolio Grader.

On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.