Kaixin Auto Holdings (NASDAQ:KXIN) stock is hoping to turn around a period of losses today with its first bit of good news this quarter. The Chinese used car dealership is moving to finalize a merger in an effort to break into the e-commerce industry.
Kaixin has not been a terribly popular industry play as far as InvestorPlace writers are concerned. The company limped along through 2020 and had been opaque as far as details regarding a merger that was in the works. In fact, when the company saw a massive spike in profits in November of last year, the company failed to report the merger talks at all.
The company is hoping to make amends with investors now, seeing those same merger talks finally come to fruition. This morning, Nasdaq formally approved Kaixin’s plans to merge with Haitaoche Limited.
The benefits of this merger are two-fold for Kaixin. It will allow the company to become a more legitimate used-car sales play through e-commerce expansion and EV sales.
Merger Presents Turning Point for Struggling KXIN Stock?
We’ve seen younger players in the Chinese used car e-commerce world have big moments recently. Particularly, this moment with Kaixin reminds me of Uxin’s (NASDAQ:UXIN) substantial gains last month. With the e-commerce industry as red-hot as it is due to the coronavirus pandemic, the time is ripe for Kaixin.
In 2021, any legitimate sales operation should have an e-commerce presence. In fact, investors have been making portfolio decisions with that in mind. Kaixin is now finally checking that box through its merger with Haitaoche.
KXIN stock saw a boom at the end of 2020. The huge gains it saw were largely due to the residual hype of the EV boom rubbing off on the company. But, investors saw the gains flatten back out to previous trading prices pretty quickly. However, this merger shows promise in the company cashing in on the EV boom by upping its offerings in the industry that’s exploding in China.
Time will tell how Kaixin plans to move forward with this merger. However, given what InvestorPlace contributor Lou Carlozo sees as the company’s penchant for silence and cover-ups, investors are right to be weary about KXIN stock. Keep this story on your radar here.
On the date of publication, Brenden Rearick did not have (either directly or indirectly) any positions in the securities mentioned in this article.