Why XPeng Stock Spiked Higher Today

Chinese companies have been a focus for investors in recent days. Shares of companies that do business in China have soared after the government announced fresh economic stimulus measures.

Electric vehicle (EV) maker XPeng (NYSE: XPEV) is one likely beneficiary of those support measures. But there are other reasons that investors are becoming more bullish on XPeng. That helped the stock surge as much as 14% Friday morning. As of 1:30 p.m. ET, XPeng shares had pared some of that rise, but held onto a gain of 10%.

Tailwinds for the EV maker

One new bullish take on XPeng's business just came from Citigroup analysts. The firm boosted its price target on the EV manufacturer as it sees increasing sales on the horizon. That should lead to better financial performance in the medium to long term.

Citi sees sales volumes nearly doubling by 2026, to over 400,000 units. Interest is strong in Xpeng's soon-to-be-released updated P7 sedan and its Tesla Model 3 rival Mona M03, according to Citi. The EV maker also plans to build a lineup of Extended Range Electric Vehicles (EREVs) in 2025. Those new vehicles include fossil fuel generators to boost the electric battery range.

The timing for those new offerings seems to be ideal. This week, China's central bank made several moves to boost business investment and aid the real estate market. That included cutting interest rates on existing mortgages as well as cutting the reserve requirement ratio for banks by 50 basis points.

Leadership in China followed that news by promising "necessary fiscal spending" to help meet its economic growth target of about 5%. That news gave investors further confidence that stronger economic growth will resume. That should benefit XPeng at an ideal time as its lineup gains interest. If that sales growth comes to fruition, better financial results will follow. That has investors boosting the stock today.

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Citigroup is an advertising partner of The Ascent, a Motley Fool company. Howard Smith has positions in Tesla and XPeng. The Motley Fool has positions in and recommends Tesla. The Motley Fool has a disclosure policy.