Please ensure Javascript is enabled for purposes of website accessibility

Why Shares of Kandi Technologies Jumped 11% Tuesday

By Daniel Miller – Nov 29, 2016 at 12:04PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Shares of Kandi Technologies jump thanks to receiving a subsidy payment that will help ensure the company continue to research and develop its electric vehicle products.

Image source: Kandi Technologies.

What happened

Shares of Kandi Technologies Group, Inc. (KNDI 2.23%) are up 11% on Tuesday, thanks to receiving a subsidy payment, giving investors a little relief after a rough year that's nearly cut its share price in half.

KNDI Chart

KNDI data by YCharts

So what

Kandi Technologies wholly owned subsidiary Kandi Electric Vehicles has received a second subsidy payment of RMB 100 million. That equals about $14.5 million. This is the second of three payments that will total RMB 300 million, or roughly $43.4 million.

Not only are these payments significant for a company that posted roughly $200 million in revenue last year, but they probably weren't fully priced into Kandi's stock price because 2015 subsidy payments were unpaid industrywide pending a review. The impact was significant and Kandi CEO, Hu Xiaoming, noted it caused a significant decrease in the company's electric vehicle parts sales.

Now what

With the subsidy payments now coming in it will help ensure that the company can continue to research and develop its portfolio of electric vehicles and parts at its Hainan facility. That's great news for the company and its investors, but don't expect as drastic a jump, if any movement at all, for the third and final subsidy payment.

Daniel Miller has no position in any stocks mentioned. The Motley Fool recommends Kandi Technologies. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.