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.
For the announcement to come really is about a new model or two: XPeng () is getting ready to launch its new G6 Ultra Smart Coupe SUV. This will be the first electric vehicle (EV) producer under its new platform. If it goes well, the automaker will be in an excellent position to keep growing.” Well, yes, and yippieeiai. OK, that's a bit too flippant but the simple announcement of a new model - even if it is on a new platform - does sound like something that may not be worth $800 million.
Xpeng share price from Hong Kong Stock Exchange
This really is the big announcement scheduled for . “Xpeng Inc (NYSE:), a leading Chinese electric vehicle manufacturer, has announced its upcoming launch of the XPENG G6 Ultra Smart Coupe SUV on June 29. This new model will mark the company's fifth addition to its lineup of intelligent electric vehicles.”
We doubt there's anything else to this. That Chapter 11 of Lordstown for example, yes, that removes a competitor from the marketplace but then no one was rating Lordstown as a major competitor anyway.
Now, note what we are not saying - that this is now a perfect short. For the stock market saying is that most of the time prices get ahead of reality - therefore buy on the rumour and sell on the fact. There's significant weight on that “most” there. We do think this happens often enough that our expectation is that the Xpeng share price will fall back tomorrow on the announcement of the new model. Just on the basis that the market will reconsider this - one new model ain't worth $800 million.
