Why Kandi Technologies Shares Collapsed Today
Actions of Kandi Technologies (NASDAQ: KNDI) plunged 25% this morning after a report on short sellers was released. At 11:50 a.m. EST, stocks remain down 20% from Friday’s closing price.
Shares of several companies in the electric vehicle (EV) sector were down at the start of today’s trading session. But after short seller Hindenburg Research released a new report on Kandi, its shares fell sharply.
Hindenburg called the company for two stock offers he used to raise funds in the last two weeks alone.
On November 20, Kandi announced that she was looking to raise $ 100 million, less than two weeks after executing another stock offer at a much lower price to raise $ 60 million.
The Chinese electric car company was profiting from a stock price that had more than doubled in just November when it announced its latest offer. Kandi said the money raised will be used for “the expenses necessary to ensure that our models of electric vehicles meet all the requirements necessary for entry into the US market.” Its subsidiary Kandi America is based in Texas.
But Hindenburg said today that his research determined that some of the company’s reports car sales are rigged. He said that approximately 55% of the sales reported by Kandi in the past 12 months were made by a company that shares the phone number of a Kandi subsidiary, and a visit to this customer revealed that he was actually part of Kandi.
Investors have pushed up shares of many companies in the electric vehicle sector amid speculation about the future development of the business. Today, investors in Kandi are wondering if the previously reported sales should be investigated further.
This article represents the opinion of the author, who may disagree with the “official” recommendation position of a premium Motley Fool consulting service. We are heterogeneous! Challenging an investment thesis – even one of our own – helps us all to think critically about investing and make decisions that help us become smarter, happier, and richer.