The electric vehicle sector has performed fairly well in 2020 so far and this week, the rally in many of those stocks continued. One of the stocks to have emerged as a gainer this week is that of Xpeng (NYSE:XPEV). The Chinese electric vehicle company has emerged as a potential play for those who are looking at alternatives to NIO when it comes to the electric vehicle industry in China. Here is a closer look at Xpeng.

The Latest Rally

Many electric vehicle stocks have recorded significant gains in 2020 so far and in such a scenario it should not come as a surprise that the Xpeng initial public offering ended up being a resounding success. The company managed to sell as many as 100 million of its American Depository Shares at $15 a share to raise $1.5 billion.

That was only the IPO price and once the shares opened for sale to retail investors, it shot up again. However, it was only in November that the Xpeng stock went on a remarkable rally and ended up hitting $74.49 a share.

The IPO happened on August 27 and over the next two months, the Xpeng stock was fairly steady before breaking out in a dramatic fashion this month. Although Xpeng has recorded impressive sales numbers, it could be argued that future growth might already have been priced in.

Course of Action

Considering the fact that the stock has gone on a tear in November and recorded enormous gains, it might be a good idea for investors to perhaps take some profits off the table. There is always the chance of a correction if big-ticket investors decided to take their winnings.

On the other hand, investors who are currently watching the rally from the sidelines might do well to wait for a correction before they decided to jump on to the Xpeng stock. It is a well-known rule of the market that all stocks experience dips and hence, waiting could be a better idea at this point.

Short selling could prove to be a disastrous course of action simply because of the strong sales numbers reported by the company. In the third quarter, Xpeng made 8500 deliveries, which represents a year-on-year jump of 266%.

At this point, either going long or short on the stock might not be the course of action for investors. However, if one decides to wait then there is the possibility of getting a favorable price.

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