Kaixin Auto Holdings (NASDAQ: KXIN) is running for the top in the market this morning, following up on the dramatic gains the stock saw Friday. While the company hasn’t issued any press releases or SEC filings, there’s good reason for the excitement. Ultimately, sales are likely to skyrocket ahead. Here’s why:
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KXIN Stock Will Get A Big Boost From Haitaoche
Early in November, a private Chinese company known as Haitaoche took a majority stake in Kaixin. The transaction happened through a reverse merger and will prove to be instrumental in the comapny’s revenue growth in the future.
Renren, the company’s previous majority stakeholder seems to agree. Before the reverse merger, Renren owned about 79% of the company. However, the company saw so much value in the transaction that it allowed Haitaoche to grab a 51% stake.
So, why would Renren give up control and how is this all good for KXIN?
Well, you have to look into Haitaoche. The company is a China-based e-commerce platform that’s focused on imported vehicles. Moving forward, Haitaoche is working to both expand its imported automobile business and work its way into the electric vehicle market.
Moreover, Haitaoche is currently working its way toward strategic partenrships with electronic vehicle manufacterers in China in order to serve a larger auidence. These vehicle sales will be contributed to the combined company that is Kaixin as part of the deal. So, it will serve KXIN and its shareholders in multiple ways:
- It will provide an immediate and significant increase in revenue.
- It will open the door to the booming electronic vehicles space in China.
- It will greatly expand the company’s audience. While a core focus on the sale of used vehicles will be maintained, Kaixin will likely quickly become the go-to source for imported and electric vehicles in China if all goes well.
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The Biden Win Is Icing On The Cake
With the transaction outlined above in mind, KXIN is already an interesting stock to dive into. However, with the recent Joe Biden win of the United States Presidential Election, investors have a lot to look forward to.
Keep in mind, for the last few years, the United States and China have been in the midest of a Trade War, led by President Donald Trump. With Biden coming into office, it is expected that tensions between the two countries will ease, leading to positive economic impact in China.
As a result, investors are expecting that consumers will be more willing to make large purchases, such as the purchase of vehicles, in China in the future. With Kaixin already being the leader in used vehicles in the region and an ability to become a leader in EV and import vehicle sales in the region, the company will be a prime beneficiary. So, KXIN stock is one to watch closely.
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