XPeng sells stock. But not to raise more money.

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The Chinese manufacturer of electric vehicles

XPeng

sell shares, but not to raise additional growth capital. It is a secondary stock sale in which some early investors are taking money off the table.

According to reports, XPeng (ticker: XPEV) offered about 10.5 million US deposit receipts, or ADRs, between $ 32.25 and $ 35.75 per share, depending on where the broker who handles the large stock of stock can determine the price. .

Each ADR of XPeng represents two ordinary shares.

XPeng shares closed at $ 38 on Monday. Large blocks are often priced at a discount on the market because it is difficult for brokers to sell many stocks at once. About 15 million XPeng shares trade per day, so 10.5 million is a huge amount to add on a daily basis.

The share sale occurs because the sales related to XPeng’s first public offering expire. Insiders and early investors are often prevented from selling shares in a new public company, usually 180 days. At the end of August, about six months ago, XPeng’s IPO tool became available.

XPeng’s share fell by about 21% in February. Stock in Xpeng Peers

Li Auto

(LI) and

NIO

(NIO)’s shares are falling closer to 10% for the month, as are the shares in the larger rival of Chinese companies, Tesla (TSLA). Investors apparently sold some shares before the IPO expired.

XPeng stock fell 6.6% in trading on the market to around $ 35.50. NIO and Li shares were also lower. The Tesla share fell almost 5% to $ 680. It traded short at around $ 650 on Tuesday morning, the price at which Tesla shares entered the S&P 500 at the end of December.

The secondary sale cannot be blamed for the total decline in XPeng or the other Chinese stocks. US stock futures are lower and high-growth stocks are being hit harder. Future on the

Nasdaq Compound,

the home of many high-tech technology stocks fell by about 1.5% after the index fell by 2.5% on Monday.

Inflation fears appear to be the catalyst for the sale. Investors are worried that all the stimulus the government is pumping into the economy will result in higher prices, an overheating economy and ultimately higher interest rates.

High-growth stocks, such as those of EVs, usually fall harder as interest rates rise. High rates cause investors to reevaluate what they have to pay for growth. Why invest in something that will generate cash flow and pay dividends far beyond when there are now options to generate investment income?

Write to Al Root at [email protected]