XPeng (HKG: 9868) (NYSE: XPEV) shares are down 6.5% today. There’s something of a pattern to XPEV share price movements and it’s not one that is greatly flattering to the company. We get deals announced and then a stock price jump. Well, great, but then we seem to get a slide back when there isn’t any of that new and good news. We take this to be evidence that the market thinks the price is a little too elevated at present.
We’ve talked before of XPeng: “Xpeng (HK: 9868) (NYSE: XPEV) stock is up 11% today in Hong Kong. This gives us a great opportunity to test one of the stock market's - in fact any financial markets' - grand memes. That we should buy the rumour and sell the fact. For what we've got here is an announcement that tomorrow, the 29th, Xpeng will make an announcement. At which point the share price rises 11%. It is possible to think of things that would increase the market capitalisation of a $9 billion company by ten and eleven percent. But we'd also tend to think that planned announcements by corporate aren't really one of those things. Takeovers, bankruptcies, government actions, yes, but a scheduled announcement of a new model? Difficult to see that really. So, we might expect the actual announcement to be accompanied by a certain deflation of this current anticipatory rise.”
In that we weren’t in fact right. The stock kept rising.
XPeng stock price from Google Finance
But when we returned to the subject we were right about XPeng: “Our view is really that there is so much uncertainty about both the company performance and also the market as a whole that the Xpeng share price is going to continue to be volatile - febrile even - as new information comes in. That’s just what happens when the market is uncertain.” And so it has remained. Each time there’s a new announcement - say the deal with DiDi - we get a bounce upwards and then a slide back.
Our read on this is as we say. There’s a lot of hope built into that share price right now. So new announcements of more deals can produce a spike but it doesn’t hold. For there’s a desire to see some real results to support that hope.
Yes, that is rather ascribing emotion to a market but markets are made up of humans who are subject to such. Thus we expect any breakout, in either direction, to depend upon real operating numbers.