Tuesday, February 7, 2023
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XPeng stock rockets toward record rally as bulls brush off bad results, outlook

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The U.S.-listed shares of China-based electric vehicle maker XPeng Inc. skyrocketed Wednesday, as investors cheered changes in China’s COVID policy while shrugging off weak third-quarter results and a downbeat outlook.

The stock
XPEV,
+48.02%
charged up 45.0% in midday trading, enough to pace all gainers on the New York Stock Exchange. It was also headed for the biggest one-day gain since going public in August 2020, surpassing the previous record advance of 33.9% on Nov. 23, 2020.

The rally comes even after XPeng reported a wider-than-expected loss for the third-straight quarter, missed on revenue for the first time and said it expected fourth-quarter revenue to fall 40% to 44% from a year ago while the FactSet consensus called for just a 4.4 decline.

Instead, investors seemed China appeared to move toward easing its zero-COVID policy, amid growing social unrest and a slowing economy. China’s government said Tuesday that it would renew its push to vaccinate the elderly, and said it would amend COVID control measures.

XPeng’s stock rally also comes at a time when investor sentiment had soured. Earlier this week, Jefferies analyst Johnson Wan downgraded the EV maker, citing recent “missteps” by the company at a time that the “honeymoon stage” for EVs in China was coming to an end.

In addition, short interest, or bearish bets on XPeng’s stock, was 5.7% of the public float, or freely tradable shares, based on the latest available exchange data. That compares with short interest as a percent of float for China-based rivals Nio Inc.
NIO,
+21.75%
at 4.1% and Li Auto Inc.
LI,
+20.67%
at 4.7%.

For Tesla Inc.
TSLA,
+5.10%,
which generated $5.13 billion in revenue from China in its latest quarter, or about 24% of total revenue, short interest as a percent of float was 2.9%.

XPeng’s stock has soared 60.7% in November but has still tumbled 41.7% over the past three months. In comparison, the Invesco Golden Dragon China exchange-traded fund
PGJ,
+10.11%
has shed 11.7% the past three months while the S&P 500 index
SPX,
+1.90%
has slipped 1.1%.

Credit: marketwatch.com

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