Shares in Kandi Technologies (Nasdaq: KNDI) tanked 23% by midday Tuesday, to $6 per American depositary share, after the company said it will some stock at a price well below Wednesday’s close.
In a statement today, the Chinese EV maker, soon expected to enter the U.S. market, said it will issue 9.4 million shares of common stock and warrants for up to 3.7 million shares to institutional investors.
Overall, Kandi will raises $60 million for shares priced at $6.38 apiece – that’s $1 below Monday’s close.
The news sent the Geely-backed carmaker’s stock tumbling for the second day. Just on Friday, Kandi reached as high as $9.80 per share. However, as the company released its disappointing third quarter results on Monday, the uptrend has reversed.
Kandi reported $18.7 million in revenues, a 41% decline year-over-year. Net loss was $1.5 million, or 3 cents per share, in contrast to income of $12.1 million in the third quarter of 2019.
However, there is a number of developments to look forward to at Kandi. One is a potential listing of its battery swap subsidiary on Shanghai Stock Exchange’s STAR Board.
“Based on feedback from three world-class advisors’ preliminary due diligence, we are confident about this proposed spin-off listing on the STAR market,” said chairman and CEO Hu Xiaoming in a statement on Monday. “By tapping China’s capital markets, listing on the STAR Board will accelerate the Company’s business growth and also enable Kandi to unlock and realize the value of this emerging business.”
Another event is the launch of the trial in Hainan and Zhejiang provinces for the government-backed rideshare program, for which Kandi is providing electric vehicles.
And last but not least, Kandi America, the U.S. subsidiary of Kandi Tech, has received the required clearance from the United States Environmental Protection Agency (EPA) for its two electric vehicle models – the K23 and K27 – via Certificates of Conformity. The company held a virtual launch event in August and is preparing to enter the U.S. market ahead of any other Chinese carmaker. Even Kandi’s backer, China’s auto giant Geely, had failed to sell its car to the American driver.
Despite this week’s dropback, the stock in Kandi still trades 24% above the level of early January and is significantly higher from this year’s lows of $2.17 per share. As Kandi benefits from China’s EV push and approaches U.S. market entry, its stock is bound to draw more attention.