Kaixin Auto Holdings (KXIN) Stock: Here’s Why It’s Flying

Kaixin Auto Holdings KXIN Stock News

Kaixin Auto Holdings (NASDAQ: KXIN) is running for the top in the market this morning, trading on gains that are better stated in multiples than percentages. However, with no press releases or SEC filings from the company, many are scratching their heads wondering why the stock is screaming for the top. Here’s how I see it:

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Why I Believe KXIN Is Flying

I want to be clear that with no catalyst driving the movement, anything I say here can only be viewed as speculation. Nonetheless, I believe that there’s a reason for the gains.

Recently, there has quite a bit of discussion about Warrants and Preferred Shares being traded on the OTC. Many have posted messages on message boards suggesting that the stock would be delisted from major exchanges, destined to trade on the OTC.

However, KXIN isn’t the only company that put warrants or Preferred Shares on the OTC. Often times, these don’t yet qualify for listing on major exchanges, but that has nothing to do with common shares. In fact, there is no indication that the stock would be delisted from a major exchange.

Investors seem to have started to realize that. At the same time, the stock has been experiencing declines for more than a year, trading at incredible lows. There has also been a boat load of short interest. Combine all of this with a very tiny public float, and bam… you have the recipe for a short squeeze.

As shorts begun to cover and the stock ticked up, it created a revolving door of shorts covering and others buying in. This seemed to have triggered the trading bots, with algo trading leading to even more dramatic gains.

The Bottom Line

It’s true, there’s no indication that KXIN stock will be delisted from major exchanges, but that’s not a good reason for a more than 120% run in value. The fact is that unless something leaked that doesn’t seem to have reached the masses yet and some insider is taking a big risk, this run is nothing but a technical move, and what goes up, will eventually come down.

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