Why Kandi Technologies Group Inc. Stock Jumped Today

Is this meaningful or just another movement?

Travis Hoium
Travis Hoium
Jul 7, 2014 at 3:30PM

Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of Kandi Technologies Group Inc. (NASDAQ:KNDI) jumped as much as 11% after announcing a new subsidy from China.

So what: Kandi's 50-50 subsidiary with Shanghai Maple Guorun Automobile Co. has received a subsidy of $31.8 million from the Chinese central government for the sale of 3,000 electric vehicles in the final three quarters of last year, and another 1,000 in the first quarter of this year. CEO Hu Xiaoming said that the payment would allow Kandi to further accelerate EV sales and development.  

Now what: The subsidy payment amounts to about $8,000 per vehicle, which isn't far off from the subsidies given in the U.S. Given the company's reliance on the subsidy, and the Chinese government's tendency to be anything but prompt with these kind of payments, I'd be cautious jumping into Kandi.