NEW YORK (TheStreet) -- Shares of Kandi Technologies (KNDI - Get Report) fell -6.8% to $17.82 Friday after the company announced a securities purchase agreement with some institutional investors for a registered direct placement of common stock at $17.20 per share for a total of $71 million.
Kandi will issue 4,127,908 shares to investors, along with warrants, to buy up to 743,024 shares at $21.50 a share. The warrants will have a term of 17 months after they are issued.
If investors exercise all options on shares and warrants, the gross proceeds of the offering would total $101 million.
Separately, TheStreet Ratings team rates KANDI TECHNOLOGIES GROUP as a "hold" with a ratings score of C. TheStreet Ratings Team has this to say about their recommendation:
"We rate KANDI TECHNOLOGIES GROUP (KNDI) a HOLD. The primary factors that have impacted our rating are mixed - some indicating strength, some showing weaknesses, with little evidence to justify the expectation of either a positive or negative performance for this stock relative to most other stocks. The company's strengths can be seen in multiple areas, such as its robust revenue growth, solid stock price performance and increase in net income. However, as a counter to these strengths, we also find weaknesses including disappointing return on equity, weak operating cash flow and poor profit margins."
Highlights from the analysis by TheStreet Ratings Team goes as follows:
- KNDI's very impressive revenue growth greatly exceeded the industry average of 11.1%. Since the same quarter one year prior, revenues leaped by 170.9%. Growth in the company's revenue appears to have helped boost the earnings per share.
- Powered by its strong earnings growth of 1000.00% and other important driving factors, this stock has surged by 319.69% over the past year, outperforming the rise in the S&P 500 Index during the same period. Although KNDI had significant growth over the past year, our hold rating indicates that we do not recommend additional investment in this stock at the current time.
- The current debt-to-equity ratio, 0.44, is low and is below the industry average, implying that there has been successful management of debt levels. Despite the fact that KNDI's debt-to-equity ratio is low, the quick ratio, which is currently 0.64, displays a potential problem in covering short-term cash needs.
- Net operating cash flow has significantly decreased to -$34.14 million or 113.58% when compared to the same quarter last year. In addition, when comparing to the industry average, the firm's growth rate is much lower.
- Return on equity has greatly decreased when compared to its ROE from the same quarter one year prior. This is a signal of major weakness within the corporation. Compared to other companies in the Automobiles industry and the overall market, KANDI TECHNOLOGIES GROUP's return on equity significantly trails that of both the industry average and the S&P 500.
- You can view the full analysis from the report here: KNDI Ratings Report
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