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| Clermont Meridian Trading Evaluates Xpeng's Successful IPO |
In its initial public offering, or IPO, priced Wednesday evening, Chinese electric vehicle startup Xpeng sold more shares for more money than the firm intended, then opened up considerably above that price once trading began Thursday. This, according to Clermont Meridian Trading financial analysts, demonstrates that demand for EV stocks is still high.
For roughly $12, Xpeng projected to sell 85 million American depository receipts or ADRs. The corporation ended up issuing 100 million ADRs for $15 each, raising around $1.5 billion.
Xpeng chose the United States and the New York Stock Exchange for its initial public offering because the United States continues to have the world's most "advanced and deepest" capital markets, according to business President Brian Gu.
"In a new and rapidly growing industry, this is critical. Although Xpeng and its U.S.-listed Chinese contemporaries Li Auto and NIO aren't profitable yet, Gu believes that the American investment community isn't hesitant to project current growth trends into the future," Matthew Bird, Institutional Director of Equities at financial services company Clermont Meridian Trading claimed.
The EV startup was valued at between $10 billion and $11 billion at the time of its IPO. Li is worth almost $16 billion, and NIO is worth around $24 billion. This corresponds to the size of each company. In the second quarter of 2020, NIO delivered 10,331 automobiles, Li had 6,604 vehicles, and Xpeng had 3,228.
When market value is divided by second-quarter deliveries, NIO earns $2 million for each delivery, Xpeng $3.2 million, and Li Auto $3.8 million. There's no reason to believe that the mathematical result of market value divided by delivery has anything to do with stock value. It's just a proxy for comparing similar businesses.
If investors had compared the smaller companies Li and Xpeng, they could have expected Xpeng stock to rise 10% to 20% on the first day of trading. The opinions of investors on each company's technology and growth are significantly more important than basic numbers.
Even the most positive investors have been surprised by the recent performance of electric vehicle companies. Li's stock increased by 28% on Wednesday. This week, the stock of NIO has risen by 41%. According to Clermont Meridian Trading statistics and analysis, Tesla, the world's most valued automaker, is up 57 percent in August so far. Investor demand for EV stock looks to be unquenchable.
All of the gains, of course, dwarf those of the S&P 500 and Dow Jones Industrial Average.
Despite the recent rally in EV stocks, investors should have expected Xpeng stock to gain on the first day of trading. Bankers, firms, and investors prefer to see IPOs perform well straight away.