Shares of Kandi Technologies (NASDAQ:KNDI) plunged 25% this morning after a short-seller report was released. As of 11:50 a.m. EST, shares remain down 20% from Friday's closing price.
Shares of several companies in the electric-vehicle (EV) sector were down at the start of today's market session. But after short-seller Hindenburg Research released a new report on Kandi, its shares fell sharply.
Hindenburg called the company out for two stock offerings it used to raise money over just the last two weeks.
On Nov. 20, Kandi announced it was seeking to raise $100 million, less than two weeks after it had executed another stock offering at a much lower share price to raise $60 million.
The Chinese electric-car company was taking advantage of a share price that had more than doubled in just the month of November when it announced its most recent offering. Kandi said the money raised 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." Its Kandi America subsidiary is based in Texas.
But Hindenburg said today that its research has determined that some of the company's reported auto sales are being faked. It said that about 55% of sales that Kandi has reported over the previous 12 months are to a company that shares the phone number of a Kandi subsidiary, and that a visit to this customer revealed it is actually part of Kandi.
Investors have driven shares of many companies in the EV sector higher on speculation of how future business will evolve. Today has Kandi investors wondering if previously reported sales need to be further investigated.