Why did Kaixin automobile, which suspended the distribution of second-hand cars, increase more than 14 times on 4 days?

 Why did Kaixin automobile, which suspended the distribution of second-hand cars, increase more than 14 times on 4 days?

So, lost the main business of happy car, what on earth let the companys stock come back to life?

On hearing the name of happy car, you will mistakenly think that it is one of the outstanding new energy vehicle enterprises in recent years. However, from the business point of view, the company originally engaged in second-hand car distribution business, and the degree of overlap with new energy vehicle business is not high.

In terms of finance, happy cars performance was dismal, which worried the market. According to public data, the company has lost money for three consecutive years. Net losses from 2017 to 2019 were $28.7 million, $89.5 million and $69.1 million, respectively.

From the middle of 2017 to the end of 2019, happy auto purchased and sold 15668 used cars to customers in two and a half years. A total of 6005 used cars were sold in 2019, a year-on-year decrease of 19.26% compared with 7438 vehicles in 2018.

According to the data released by the automobile industry association, the cumulative transaction volume of second-hand cars in China in 2019 is 14.9228 million, with a year-on-year growth of 7.96%. In 2019, the market share of Kaixin automobile is less than 0.05%.

Whether to restructure again after discontinuing the main business?

In a novel coronavirus pneumonia announcement August 26th, the car dealers market was severely tested and the revenue dropped sharply, according to the announcement of the happy car in August 26th. Therefore, in order to solve the test faced by the operation, the company is reviewing the current business model and considering suspending the second-hand car business. The revenue in the second quarter of this year will decline significantly, and there will be no obvious source of income in the third quarter.

In view of the fact that automobile sales account for 99% of the main revenue of Kaixin automobile, after the second-hand car business is suspended, Kaixin automobile will no longer generate corresponding income in the near future. It is not known whether it will adjust its business direction again for asset restructuring.

The fund manager of a public fund company told reporters that the soaring share price of happy auto does not rule out the possibility of fund speculation.

As of press release, happy auto and its parent company Renren did not respond to the recent stock price surge.