Why Kandi Technologies Is Down 17% Today

What happened

Shares of Chinese electric-car maker Kandi Technologies (NASDAQ:KNDI) are down 17% as of 2 p.m. EST Friday, after dropping as much as 21% earlier in the day. 

Like many other companies in the electric-vehicle (EV) sector, shares of Kandi have been on a tear, gaining more than 80% in the past 30 days prior to today.

So what 

Today’s drop comes after the company announced it is going to take advantage of the recent share price run to raise some capital. But the shares it will be selling are being priced at $11.30 per share, 22% below Thursday’s closing price of $14.41 per share.

Kandi model K23 in blue

Kandi Model K23. Image source: Kandi America.

The company announced it will seek to raise $100 million in new capital through a registered direct placement of shares being sold to certain institutional investors through common stock and warrants. The offering will be priced at $11.30 per unit. 

Now what

Investors’ initial reaction to sell the stock down to the unit offering price was tempered by the warrant exercise price being right in line with yesterday’s closing price. 

This marks the second offering the company has announced this month. Less than two weeks ago, the company offered stock priced at $6.38 per share to raise about $60 million. 

Today’s announcement added that the proceeds will be used for “expenditures necessary to assure that our EV models comply with all necessary requirements for the entry into the U.S. market.” 

The company’s U.S. subsidiary, Kandi America, is based in Texas. The state just allowed a tax rebate for the first 2,000 applicants of buyers of renewable energy-powered automobiles.

Investors should consider this capital raise a good move, if it helps to drive sales in the U.S. 

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