Why Kandi Technologies Stock Just Popped 7.5%

What happened

Chinese electric-vehicle maker Kandi Technologies (NASDAQ: KNDI) got off to an inauspicious start in August, when its "live virtual launch" of two new electric car models (the K23 and K27) netted the company only 11,000 registrations to view the event online -- and just 436 pre-orders. Now, however, Kandi is taking a second stab at invading the U.S. market for electric cars, announcing "nationwide distribution" in the U.S. from physical car stores.

Investors are betting that things will work out a bit better for Kandi this time around, and as of 12:20 p.m. EDT, the stock is up 7.5%.

Two Kandi cars with a saleswoman between them

Would you buy a Kandi car based on just this picture? Image source: Kandi Technologies.

So what

Does Kandi's news justify the jump? Let's take a closer look.

According to Kandi, its "initial rollout" will feature "market-exclusive agreements to a maximum of three dealer partners in the Dallas/Fort Worth Metroplex." But right off the bat, this sounds like something less than even a Texaswide rollout, much less a nationwide one.

And Kandi may be starting out even smaller than that. The company says it will be selling cars through an "innovative micro hub showroom" just 2,000 square feet in size. Each of the showrooms will include "two interactive kiosks" -- which should just about fit in the space allowed -- but keep its inventory "housed off-site."

Now what

On the one hand, Kandi's minimalist approach to showrooms sounds like it will minimize start-up costs for folks who want to join its dealer network, which should make it easier to find distribution partners quickly. On the other hand, though, we saw in August that virtual selling didn't work particularly well to interest car buyers in Kandi's largely unknown product. I'm not sure that doubling down on that sales strategy, by selling primarily via lobby kiosks in bricks-and-mortar locales, is going to work much better.

Investors who are buying Kandi stock based on today's corporate PR may be failing to learn the correct lessons from history -- and may end up regretting that they didn't study harder.

10 stocks we like better than Kandi Technologies
When investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Kandi Technologies wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of September 24, 2020

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

In This Story


Latest Markets Videos

    The Motley Fool

    Founded in 1993 in Alexandria, VA., by brothers David and Tom Gardner, The Motley Fool is a multimedia financial-services company dedicated to building the world's greatest investment community. Reaching millions of people each month through its website, books, newspaper column, radio show, television appearances, and subscription newsletter services, The Motley Fool champions shareholder values and advocates tirelessly for the individual investor. The company's name was taken from Shakespeare, whose wise fools both instructed and amused, and could speak the truth to the king -- without getting their heads lopped off.

    Learn More