Xpeng (NYSE:XPEV) stock is down over 9% today in premarket trading on rising concerns about economic growth in China amid ongoing Covid-19 lockdown measures.
XPEV stock has been trending lower in recent days due to a host of reasons, including mounting worries about the Chinese economy. The confirmation last weekend of Chinese president Xi Jinping to a third term in office has also raised concerns about potential crackdowns on publicly traded companies in the nation of 1.4 billion people.
So far this year, XPEV stock has declined 85% to trade at $7.36 on the New York Stock Exchange.
What Happened
The latest media reports out of China say that millions of people in China across dozens of cities are again in Covid-19 lockdown as the country continues with its “zero-Covid” policy. According to reports by BBC News, some 800,000 people in the city of Wuhan, where Covid-19 was first detected, are back in lockdown to prevent the spread of the deadly respiratory disease.
Separately, Reuters is reporting that more than 200 million people across China are currently in a Covid-19 lockdown, accounting for nearly a quarter of China’s gross domestic product (GDP). Earlier this month, President Xi said that there would be no easing up of the zero-Covid policy this fall and winter, calling it a “people’s war to stop the spread of the virus.”
Why It Matters
For companies such as Xpeng, the renewed lockdowns are anticipated to impact their manufacturing and sales, negatively impacting current and future earnings. That prospect has investors worried and hitting the “sell” button on XPEV stock. The Chinese electric vehicle (EV) maker’s stock has been falling sharply in recent days, dropping as much as 11% on Oct. 26 amid heightened investor concerns about the economic and political stability in China.
Ironically, the drop in XPEV stock comes at a time when the company has been introducing new technologies. Earlier this week, the Guangzhou, China-based company publicly introduced a prototype for a flying car, as well as new robots. The new products have not been enough for Xpeng to overcome concerns about the broader macroeconomic headwinds facing China.
What’s Next for XPEV Stock
XPEV stock continues to fall and it is not sure when investor sentiment toward the company will improve. The key will be for investors to regain some confidence in China’s political leadership and the country’s economy. Until that happens, investors should expect that shares of Xpeng and other Chinese stocks will continue to fall.
On the date of publication, Joel Baglole 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.
