Shares of Kandi Technologies (Nasdaq: KNDI) tumbled as much as 15% by midday Friday on entering a deal to sell $100 million of stock and warrants to “certain institutional investors” through a registered direct placement.
Under the deal, 8.85 million “units” are being issued for a price of $11.30 each, according to a statement today posted by Kandi. Based on Thursday’s closing price, the unit pricing represents nearly a 22% discount.
Each unit represents one share and 0.4 warrants to buy the company’s stock. The warrants carry an exercise price of $14.50 per share.
The Jinhua-based electric vehicle maker anticipates using the proceeds from the offering for the research and development of sports car makes. It also plans on proceeding with the needed “expenditures” to ensure its EV models comply with American rules for a smooth entry into the U.S. market.
The move today by Kandi marks its second registered direct placement in November. Earlier this month, Kandi raised $60 million through a separate registered direct offering. While investors weren’t too pleased with that one either, Kandi’s stock did rebound to big gains before falling again today. In fact, on Thursday Kandi hit its highest trading level in more than five and a half years at $14.45 per share.
Overall investors have been bullish on the electric vehicle space this year including on Kandi’s rivals Nio (NYSE: NIO) Li Auto (Nasdaq: LI) and XPeng (NYSE: XPEV).
Kandi got the green light earlier this month to enter the U.S. market. Through its subsidiary Kandi America, it can now sell its K23 and K27 EV models. The news is big for Kandi because it is now entering the market ahead of any other Chinese carmaker. Even one of Kandi’s partners, China’s auto giant Geely (HKEX: 00175), had failed to sell its car to the American driver.
In addition, the company has been looking to open a manufacturing base in North America for both its off-road and EVs and is in preliminary talks with potential partners including local government agencies.
Shares of Kandi have accelerated 155% year-to-date.