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Why Kandi Technologies' Stock Is Rising Today

By John Rosevear – Updated Jul 8, 2020 at 2:08PM

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Electric-vehicle sales in China are growing again. Can Kandi take advantage?

What happened

Shares of Chinese electric-vehicle maker Kandi Technologies (KNDI -0.34%) were trading higher on Wednesday after upbeat June sales reports from other companies selling electric vehicles in China, including giant Tesla (TSLA 1.66%).

As of 1:45 p.m. EDT, Kandi's American depositary shares were trading up about 9.4% from Tuesday's closing price.

So what

As with many other Chinese companies, Kandi's sales took a big hit in the first quarter as China imposed strict stay-at-home orders amid the coronavirus pandemic. But investors looking for signs of optimism (Kandi doesn't say much) have found some in the June sales reports for electric vehicles in China: Both Tesla and Chinese rival NIO (NIO -2.20%) had big year-over-year sales increases, suggesting that the market for what China calls "new energy vehicles" is back on a growth trajectory.

A red Kandi K27, a small electric hatchback.

Kandi's K27 is an urban commuter car with a range of about 100 miles on a charge. Image source: Kandi Technologies.

While Kandi has been around for years — it has been traded on NASDAQ since 2008 — it hasn't made much of an impression on auto investors outside of China. For starters, the maker of small battery-electric cars and off-road vehicles is still a tiny company, with just $135.7 million in revenue in 2019. (Contrast with the much younger NIO, which reported $1.06 billion in revenue on sales of just over 20,000 vehicles last year.)

So what's going on with the stock now? Take a look at the big gains posted by Tesla and NIO since the market's mid-March lows.

NIO Chart

NIO data by YCharts.

I think those gains have motivated investors to take a fresh look at other electric-vehicle stocks, and together with the new signs that China's electric-car market is growing again, interest in Kandi is rising.

Now what

CEO Hu Xiaoming said in April that fresh cash infusions from big domestic automaker Geely and economic-development authorities in the city of Jinhua have given Kandi added balance-sheet strength despite the impact of the pandemic. But investors will have to wait until the company's second-quarter earnings report to learn more, likely in the second half of August.

John Rosevear has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Tesla. The Motley Fool has a disclosure policy.

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