Today, investors in Chinese electric vehicle (EV) company Xpeng (NYSE:XPEV) and XPEV stock are seeing some red. It appears Chinese stocks are once again in selloff mode, following a series of negative news items that have plagued this sector this week.
Among the key things investors in Chinese equities are watching right now, Chinese growth underwhelmed investors. This past month’s economic growth was vastly lower than what economists and investors were expecting. This has led to concerns about the global recovery coming out of this pandemic slowing.
Additionally, concerns about other regulatory mandates related to the breaking up of Ant Group and plummeting bond prices for Chinese property developers has investors on edge.
However, when it comes to EV-related stocks, this is a sector that has just recently fallen under scrutiny. China’s industry minister recently commented that there are “too many” EV makers in China. Accordingly, consolidation in this sector is expected. However, who will ultimately be acquired or pushed out remains to be seen.
For Xpeng, one of the smaller players in this sector, one might think this is actually a good thing. Should Xpeng be swallowed up, investors may be paid a nice premium for their shares. That said, how things are done in China may be slightly different than what we’re used to here at home. Accordingly, investors don’t seem too happy with any sort of negative commentary from regulators on a given sector right now.
That said, there are two key reasons investors in XPEV stock may want to celebrate. Let’s dive into two bullish catalysts for this stock, on a down day for Xpeng.
2 Reasons to Be Bullish on XPEV Stock
Today, a Reuters report highlighted the possibility Xpeng could be in the market for acquisitions. The company is reportedly considering acquiring smaller, less successful rivals. Such a move would be intended to boost production capacity, as the company scales up production.
Indeed, the speed at which Chinese EV makers can ramp up production has been a key issue for investors. A global chip shortage has threatened the growth trajectories of companies in this sector. However, combining forces could be exactly what the industry minister wants. Accordingly, this should be viewed as good news by investors.
Additionally, Xpeng has also reportedly launched its third production model. The company calls its XPeng P5 model a “smart family sedan,” though the electric vehicle does appear to be more of a crossover/small SUV from initial photos.
The pricing for this smart family sedan is slated to come in at the equivalent of approximately $24,500 to $34,500. Investors bullish on Xpeng’s ability to capture more market share among the middle class may certainly like this announced addition. Furthermore, deliveries are expected to commence later in October.
These announcements certainly are bullish. However, sentiment among Chinese equities remains a key headwind these stocks will face. Accordingly, XPEV stock will be an interesting one to watch from here.
On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.