The shares of Kaixin Auto (NASDAQ:KXIN), which owns auto dealerships and manufactures electric vehicles in China, are surging today. KXIN stock is jumping 40% to $1.54 in morning trading after Kaixin agreed to supply 20,000 EVs to a China-based company that plans events for tourists and Chinese citizens.
So what else do you need to know?
Well, under the deal, Kaixin expects to receive about 6 billion yuan, or approximately $938 million from Beijing Camping Club Sports and Culture Communication. Over the course of five years, Camping Club will order a minimum of 20,00 vehicles. The dealership network has called the deal “a strategic partnership.”
Why Is KXIN Stock Up Today?
In a news release, Kaixin CEO Mingjun Lin commented on the deal:
“The new energy vehicle business of Kaixin will focus on securing large orders from our strategic partners, accelerating growth of overall business scale through integration of different scenarios, transboundary cooperation and cross-industry joint innovations.”
Investors should note that Kaixin has been making a big push into the electric vehicle space. In August 2021, it bought Henan Yujie Times Automobile, which focuses on manufacturing small EVs.
As it has invested in this business, it has struck deals with customers. In December 2021, Kaixin agreed to supply Beijing Bujia International Logistics with a minimum of 10,000 electric trucks during a five-year period. Also in December, Shencheng Biotechnology agreed to buy 10,000 electric, custom trucks.
In the first half of 2021, Kaixin’s sales jumped 206% year-over-year to $2 million. Excluding a loss from a goodwill impairment related to an acquisition, its loss from operations in the first half of the year was $300,000.
On the date of publication, Larry Ramer did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.