Kandi Technologies Q4 Results Are Not So Sweet

Kandi Technologies Embraces Offroad EV Market 

Shares of Kandi Technologies (NASDAQ: KNDI) have been moving steadily lower the past few months and look like they will continue to head lower at least in the near term. The company has been working hard on a transformation that is paying off but is still in its earliest phases and general market conditions are unfavorable at best. The shift is from the traditional EV passenger vehicle market into non-traditional areas such as scooters and other personal transportation devices. Among the most popular are electric scooters for kids and there is a growth market. Scooter sales are up triple digits but the problem is those sales are still a drop of a drop in the bucket compared to what it could be doing in other markets. 

Kandi is also focusing on the off-road market which is parallel to the scooter business and includes golf carts, neighborhood carts, and other low-range personal-use vehicles. This is a smart move but poses a problem as well. The company is beginning to look a little scattered with too many irons in the fire at one time, with the global supply chain still in disarray and shortages of key components still a problem, we feel the company should expand its product line but slowly. 

“We see huge demand building for electrified off-road vehicles. In 2022, we will apply EV technology to off-road vehicle products and launch a variety of pure electric utility terrain vehicles (“UTVs”), neighborhood EVs (“NEVs”), golf carts, and off-road crossover vehicles. We will make full use of our high-end technology, which is the culmination of years of development work in EVs, to aggressively pursue the off-road vehicle market.

Kandi Stays Out Of Pure-EV Market 

Kandi’s claim to fame was and is a battery-swapping model that it sees as the future of the EV auto market. The problem for them is the market is not yet mature enough to sustain the model so they are on the sidelines hence the switch to other EV products, scooters, and off-road vehicles. The 2021 results show the success of the switch with total revenue up 18.9% over last year despite a 37% decline in the previous core EV parts sales. Other EV products are up 116% YOY with a 420% increase in self-balancing scooters and associated parts. 

Moving down, the company is well run and able to improve margin by 30 basis points. This helped produce a 67.5% increase in operating income and an improvement to the balance sheet. On the bottom line, the full-year EPS of $0.30 beat the Marketbeat.com consensus by $0.02 despite relative weakness on the top line and reversed a loss in the previous year. The company did not give any guidance for the coming year but it did provide an optimistic outlook for business and the future of the alternative EV industry. 

The Technical Outlook: Kandi Moves Higher, Gives Bearish Signal 

Shares of Kandi Technologies moved higher following the Q4 results but the signal is ultimately bearish. The stock is in a downtrend and the post-release action created a red candle and a downwardly biased Harami Pattern as well. If price action breaks below the $2.50 level and it looks like it will, we see the stock continuing its downward spiral until it is able to successfully widen its product line and start getting revenue into the $100 million range on a quarterly basis.