What happened
The stock of XPeng (XPEV 2.87%) is falling precipitously today. The China-based electric vehicle (EV) company's share price was down roughly 13.3% as of 1:45 p.m. ET Monday.
There doesn't appear to be any negative business-specific news driving the big sell-off, but the broader market is seeing a day of bearish pressures, and Chinese stocks are being hit particularly hard. Concerns about the spread of the coronavirus omicron variant in China, the country's ties with Russia, and other factors are prompting a dramatic pullback for companies listed on the Hong Kong exchange, and XPeng is being caught up in the pullback.
Image source: Getty Images.
So what
Chinese stocks saw their worst single-day sell-off since 2008 on Monday. In addition to concerns related to the spread of the omicron variant in China, regulatory crackdowns in the country, the potential for Chinese stocks to be delisted from U.S. exchanges, and geopolitical tensions and developments connected to Russia's invasion of Ukraine are likely also factoring into the sell-off.
Now what
XPeng stock now trades down roughly 64.5% from its 52-week high and roughly 72% from the lifetime high that it hit in November 2020. The company has a market capitalization of roughly $17.3 billion and is valued at approximately 2.7 times this year's expected sales.
With its population of roughly 1.4 billion people and significant government support for the EV transition in the country, China is a massive market, and XPeng could have a long runway for growth over the long term. But there are many factors that could create problems for U.S. investors who buy the stock, so shares still carry a relatively high degree of risk despite otherwise looking attractively valued given the company's strong footing in the EV industry.
