Written by Cláudio Afonso | LinkedIn | X
Investors in Chinese electric vehicle (EV) companies may need to reassess their strategies around new model launches, according to analysts at UBS.
After analyzing 18 model launches from Nio, XPeng, and Li Auto, the firm noted a consistent pattern in stock price behavior: the share price tends to rise ahead of new model releases but declines afterward, as Street Insider initially reported.
The bank research found that stock prices typically increase by 19 percent one month before a launch and by 5.3 percent in the week leading up to the event.
However, following the release, stocks tend to fall—5 percent one week after, 8.4 percent one month later, and a notable 15.4 percent three months post-launch.
UBS noted that the trend reflects a common “buy on anticipation, sell on news” as investor enthusiasm typically peaks around the time of the launch, but once the new model is unveiled, stock prices often retreat as the initial excitement fades.
According to the bank, contributing factors include potential disappointment with the new vehicle’s performance, cannibalization of existing models, and higher production costs.
In the research note, the firm has also noted that the recent jump in Nio and XPeng’s share price was likely tied to upcoming model launches.
Nio officially launched the first model under its sub-brand Onvo on September 19 while its new flagship sedan ET9 will arrive in the Chinese market early next year followed by the Firefly launch event, the second sub-brand from the Nio Group.
XPeng also launched its cheapest model ever Mona M03 recently, on August 27. The Guangzhou headquartered manufacturer will launch its new flagship sedan P7+ next month.
UBS links the underperformance of Li Auto shares to the lack of new models expected this year. The brand will launch its second fully electric model next year following a delay due to major design changes.
The firm maintains a Buy rating on Li Auto due to “its current low valuation” while holding Neutral ratings on Nio and XPeng.
Written by Cláudio Afonso | LinkedIn | X
