XPeng sells shares. But not to raise more money.

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Chinese electric vehicle manufacturer

XPeng

sells stocks, but not to raise additional growth capital. This is a secondary stock sale in which some early investors take money off the table.

Reports on Tuesday indicated that XPeng (ticker: XPEV) would offer around 10.5 million U.S. certificates of deposit, or ADRs, between $ 32.25 and $ 35.75 per share, depending on where the broker managing the large block of shares is able to set the price.

Each XPeng ADR represents two common shares.

XPeng stock closed at $ 38 on Monday. Large blocks are often offered at a discounted price relative to the market because it is difficult for brokers to sell a lot of stocks at once. About 15 million XPeng shares trade per day, so 10.5 million is a significant amount to add every day.

The sale of shares comes as the block on sales related to XPeng’s initial public offering expires. Insiders and first-time investors are often prevented from selling shares of a newly opened company for a period of time, usually 180 days. XPeng’s IPO tool was put in place at the end of August, about six months ago.

XPeng stock is down about 21% in February. Stock in Xpeng peers

Li Auto

(LI) and

NIO

(NIO) is down closer to 10% for the month, as are shares of Chinese firms’ biggest rival, Tesla (TSLA). Investors appear to have sold some shares before the IPO blockade expired.

XPeng stock was down 6.6% in pre-market trading to around $ 35.50. The shares of NIO and Li were also lower. Tesla stock was down nearly 5% to $ 680. It briefly traded 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 held responsible for the total decline of XPeng or other Chinese stocks. US equity futures are down and high growth stocks are hit harder. Futures on

Nasdaq composite,

which are home to many high-growth tech stocks, fell about 1.5% after the index fell 2.5% on Monday.

Inflation fears seem to be the catalyst for the sale. Investors fear that any stimulus the government injects into the economy will result in higher prices, overheating of the economy, and ultimately higher interest rates.

High growth stocks, like those of EV companies, tend to fall more when interest rates rise. The high rates are causing investors to re-evaluate what to pay for growth. Why invest in something that will generate cash flow and pay dividends much later when there are options to generate investment income now?

Write to Al Root at [email protected]