Why EV XPeng (XPEV) Stock is Surging Today

XPeng (NYSE: XPEV) stock price rose more than 5.6% in premarket trading Wednesday after the electric car maker joined the mainland China stock trading link the Shenzhen-Hong Kong Stock Connect.

The addition to the trading link will allow mainland China-based investors to access XPeng’s shares, presenting the carmaker with the opportunity to broaden its investor base.

“The inclusion will not only further expand and diversify our investor base but also provide the opportunity for our customers, partners, and EV and technology investors in China to participate in our exciting growth story,” Brian Gu, president of XPeng.

XPeng had its public debut in the U.S. in 2020, followed by its secondary listing in Hong Kong in 2021. The automaker is pushing to expand its investors network amid a high-growth period of the electric car market in China.

The company continues to compete with other Chinese EV makers including Nio and Li Auto, but also other global industry leaders like Tesla.

XPeng has also been making efforts to expand into international markets but the company and its rivals continue to face challenges around the global chip shortage.

“We see this catalyst arriving with huge potential as most domestic fund mandates allow them to buy stock connect; total AUM is Rmb16 trillion and there will be HNW retail investors as well. Also, the NEV sector is the top hot sector with 35% of investors interested, according to New Fortune (also known as Xin Caifu),” Citi analyst Jeff Chung wrote in a client note.

The analyst also expects “production/shipment volume for March/April to accelerate versus January’s level. We see all NEV stocks as relatively cheap now, while Xpeng possesses the most alpha (7 catalysts).”

XPeng stock price is down over 25% YTD.

By Senad Karaahmetovic | [email protected]

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