Hindenburg Research appears betting against Kandi
Short-seller Hindenburg Research continues to look for more “victims” in the e-mobility world. This time, they have chosen to go after China’s Kandi, which has just become active on the US market this year.
Readers may remember the serious fraud accusations against Nikola which Hindenburg Research raised earlier this autumn. The short seller has now found the next electric vehicle manufacturer to accuse of impropriety in the Chinese small car manufacturer Kandi, which only just became active in the USA this year. The company is a cooperation with Geely.
The core of Hindenburg Research’s assertions this time: Kandi would “sell” a large proportion of its electric cars to dummy companies associated with the company. This is said to have been the case for almost 64 per cent of Kandi’s sales in the last twelve months, according to Hindenburg.
“The company’s largest customer, representing ~55% of last twelve months (LTM) sales, shares a phone number with a Kandi subsidiary, and shared an executive with Kandi,” the report says. “We visited the ‘customer.’ It is based in a tiny building right next to Kandi’s factory with a sign indicating that it’s a Kandi company. The same building housed another entity used by Kandi as part of a separate fake sales scheme to collect illegitimate subsidies from the Chinese government, for which it was fined and sanctioned.”
Kandi responded in a first statement, saying that Hindenburg had “taken a short position in shares of Kandi”. The company added they “believe that the report contains numerous errors, misstatements of historical facts, inaccurate conclusions, and superfluous opinions”. At the same time, they said they would take seriously any allegations of impropriety and would study Hindenburg’s report. “We intend to thoroughly research the accusations, investigate internally as needed, and offer a public response in the near future,” a spokesperson said.
Looking back at the row over Nikola, the short seller had declared war when the e-truck maker was about to close a deal with GM that saw stocks rise – to the disadvantage of Hindenburg Research. After the accusations, GM stepped back from the agreement, and the Nikola founder stepped back from his position.
At which value Hindenburg had their bets on Kandi at the time of the new allegations is unknown at this stage. Short selling largely consists of the practice of betting on falling prices, i.e. short-sellers bet on, and profit from, a drop in a security’s price. Shares of Kandi have tumbled more than 33% since the Hindenburg report was published Monday, Business Insider said.