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The electric car Xpeng P7.
Jeenah Moon / Bloomberg
The Chinese manufacturer of electric vehicles
XPeng
is selling shares, but not to attract additional growth capital. This is a secondary stock sale with some early investors taking money off the table.
On Tuesday, reports reported that XPeng (ticker: XPEV) will offer approximately 10.5 million U.S. certificates, or ADRs, between $ 32.25 and $ 35.75 per share, depending on where the broker dealing the large block of shares price. can determine.
Each XPeng ADR represents two common shares.
The XPeng stock closed at $ 38 on Monday. Large blocks are often discounted in the market as it is difficult for brokers to sell many shares at once. About 15 million XPeng shares are traded per day, so 10.5 million is a large amount to add on any given day.
The stock sale comes when a lock-up of sales related to XPeng’s IPO expires. Insiders and early investors often cannot sell shares in a new publicly traded company for a period of time, typically 180 days. XPeng’s IPO tool in late August, about six months ago.
XPeng stock fell about 21% in February. Stock in Xpeng peers
Li Auto
(LI) and
NIO
(NIO) shares are down closer to 10% this month, as have the shares of the Chinese companies’ larger rival Tesla (TSLA). Investors appear to have sold some shares before the IPO lockup expires.
XPeng shares fell 6.6% in premarket trading to around $ 35.50. Shares of NIO and Li were also lower. Tesla stock fell nearly 5% to $ 680. It traded briefly on Tuesday morning at around $ 650, the price at which Tesla shares entered the S&P 500 in late December.
The secondary sale cannot be blamed for the entire decline of XPeng or the other Chinese stocks. US stock futures are falling and fast-growing stocks are hit harder. Futures on the
Nasdaq Composite,
home to many high-growth technology stocks, fell about 1.5% after the index fell 2.5% on Monday.
Fears of inflation appear to be the catalyst for the sell-off. Investors are concerned that any stimulus the government is pumping into the economy will result in higher prices, an overheated economy and ultimately higher interest rates.
High growth stocks, such as those of EV companies, tend to fall harder when interest rates rise. High interest rates are causing investors to re-evaluate what to pay for growth. Why invest in something that generates cash flow and pays dividends in the distance when there are now opportunities to generate investment income?
Write to Al Root at [email protected]