Shares of Kandi Technologies Group Inc. (NASDAQ: KNDI) lost a quarter of their market value in midday trading Monday, after Hindenburg Research — a firm best known for its short report on Nikola Corporation (NKLA) — alleges in a new report that the Chinese electric vehicle (EV) maker has used fake sales and the recent EV hype to raise $160 million from U.S. investors in November 2020 alone.
The report states that an investigation into Kandi Technologies’ factories and customer locations found that almost 64% of the company’s sales over the last 12 months (LTM) have been to undisclosed related parties. Furthermore, the largest customer representing 55% of LTM sales shares a phone number with a Kandi subsidiary and an executive with Kandi.
Hindenburg also said that went after this big customer to visit its location and a sign indicating it was a Kandi company was found.
“The company has consistently booked revenue it cannot collect, a classic hallmark of fake revenue,” Hindenburg Research said in its report, noting that the company’s “top financial ranks have been a revolving door; another key sign of accounting irregularities”.
Kandi “has had three auditors in the past 5 years, and four chief financial officers in the past four years,” the firm said, while highlighting the fact that Kandi’s latest issues are part of a long-running pattern rather than an isolated incident.
Hindenburg revealed that after extensive research that includes interviews with over a dozen former employees and business partners, and review of numerous litigation documents and international public records, it has taken a short position on shares of the Chinese company, noting that this is an opinion and as such it encourages investors to do their own due diligence.
At last check, shares of Kandi were off 28.34% to $9.76. The stock has now nosedived more than 30% since closing at a record high of $14.93 a week ago.
Disclaimer: This page contains affiliate links. If you choose to make a purchase after clicking a link, we may receive a commission at no additional cost to you. Thank you for your support!