What happened Kandi Technologies (NASDAQ: KNDI) got Kandi-crushed in Tuesday trading, closing the day down 22.7%. The Chinese electric car-maker has a market capitalization of just $328 million, and just announced plans to sell $60 million worth of stock and warrants (to buy stock) in a private placement -- enough to dilute existing shareholders out of nearly 15% of their ownership stake. Image source: Getty Images. So what Specifically, Kandi says it will sell 9.4 million shares to institutional investors at a price of $6.38 per share. In addition to the shares, these institutional investors will receive warrants to purchase a further 3.8 million shares of stock at an exercise price of $8.18 apiece. Now, at that price, it's possible those warrants may never be exercised. (Kandi closed trading today at only $6.01, so there's little reason to exercise warrants until the stock price gets well over $8.) If they do get exercised, though, it will mean two things have happened: First, Kandi stock will have gone up a lot (which is a good thing) and second, shareholders will find themselves diluted out of another 5.6% of their ownership stake (which is a bad thing). Now what Kandi's timing on this announcement is curious, inasmuch as just last quarter, Kandi reported its first positive free cash flow in a year, generating $19.1 million in real cash profit. The timing is also probably disappointing for investors who, seeing that free cash flow turn positive, may have concluded that Kandi is now making money on its own, and might not need to use dilutive share offerings to generate the cash it needs going forward. On the other hand, Kandi stock had appreciated a solid 50% from just the end of October to the end of last week. With valuations that high, one can hardly blame Kandi for raiding the cookie jar, selling some stock, and raising a bit of extra cash while its stock price was high. Investors can only hope it was worth it, and that Kandi will now put its extra cash to good use growing the business. 10 stocks we like better than Kandi TechnologiesWhen investing geniuses David and Tom Gardner have a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.* David and Tom just revealed what they believe are the ten best stocks for investors to buy right now... and Kandi Technologies wasn't one of them! That's right -- they think these 10 stocks are even better buys. See the 10 stocks *Stock Advisor returns as of October 20, 2020 Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.Source