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Tech Stocks

XPeng Stock Analysis: Smart Cars, But Is It a Smart Investment?

The Chinese Electric Vehicle (EV) market is beginning to heat up again, and it looks like XPeng (NYSE: XPEV) stock is ready to take full advantage of the high demand for electric vehicles. Last August, the electric car manufacturer held its IPO, with XPEV share prices opening at $23 per share.

Since the company went public, XPeng stock went parabolic, climbing over 200%, and then has cooled off since currently sitting just above 40$ a share. With competition growing and Chinese authorities introducing a new Five Year Plan focused on shifting away from foreign technology, will its high-growth story remain true?

The company is set to release its earnings on Thursday, August 26th, before the market opens. Investors will be focused on the delivery numbers and if the massive growth can continue. Let’s dig deeper into the different factors that can have dramatic impacts on XPEV stock price.

xpeng stock analysis

XPeng Stock Analysis: Can XPEV Keep up With the Competition?

It’s no secret by now that the electric vehicle market in China is much bigger than that of the United States. China alone makes up around 50% of the global battery electric vehicle market. This according to new research from Mckinsey & Company.

XPeng or Xiopeng Motors is uniquely positioned to exploit the electric vehicle market and continue growing at a rapid pace. The Chinese electric vehicle maker currently offers two electric car models, the G3 Smart SUV and the P7 Smart Sedan. Both of which have experienced a significant increase in demand this past year.

However, XPeng isn’t the only EV maker experiencing high demand for its products in China. Other Chinese EV automakers are also multiplying due to pent-up demand and a desire to go electric. Two of the other well-known Chinese EV automakers are NIO Inc. (NYSE: NIO) and Li Auto (NASDAQ: LI). And then there is the popular American EV automaker, Tesla (NASDAQ: TSLA).

In the past year, the electric vehicle makers have all experienced increases in share price. However, NIO has led the way thus far, with XPeng following in second and Tesla and Li Auto battling out for third and fourth.

XPeng Stock Financial Performance

With XPeng set to deliver their second-quarter financials on Thursday, August 26th, the race for China’s top electric vehicle maker can get much closer. In XPeng’s first quarter 2021 financial results, the company announced better results than expected by delivering on the company’s high growth potential.

  • Deliveries for the quarter reached 13,340 units, a 487.4% increase from the same time a year ago.
  • The company’s total revenue came in at $450.4 million, representing a growth of over 600%.
  • Despite solid numbers, XPeng still had a net loss for the quarter, totaling $120.1 million. Slightly higher than the same accounting period of 2020, totaling just over $100 million.
  • April 2021 was a particularly strong month for XPeng Smart EV deliveries. The company delivered 5,147 units, an increase of over 285% from the previous year.
  • The company also noted that as of April 30th, 2021, the electric vehicle manufacturer delivered 18,487 year to date, an increase of over 400%.
  • XPeng announced its highest ever monthly delivery record in July, delivering 8,040 vehicles. This represents a 228% increase from the previous year.

The Company’s CEO noted they achieved this “record-breaking” quarter despite the chip shortage and seasonally slower auto sales. He also emphasized the company’s advanced technology, XPILOT Software. These advances are beginning to generate revenue and can be a critical factor in producing recurring revenue in the near future.

The Future of XPeng

There’s a lot to be excited about if you are an XPeng investor. The company is transitioning into a new phase of its life cycle. Xpeng just beat its monthly delivery record in July with a 200% increase in deliveries over the previous year. This might leave you thinking XPEV investors are enjoying massive returns.

However, this hasn’t been the case. Since the beginning of the year, XPeng stock price has dropped over 30%. The stock has since rebounded and is currently sitting around -12% year to date. Despite a rough start to 2021, there is plenty to look forward to for investors.

XPeng P5 Debut – The electric vehicle maker announced the addition of another model to the smart sedan lineup, the XPeng P5. The new smart sedan features Lidar technology, a sensory system used for autonomous driving.

Wuhan Manufacturing Base – XPeng announced on April 8th, 2021 the company entered into an arrangement with the city of Wuhan to build a new manufacturing base. The base will feature a 100,000 unit annual capacity. This represents a significant boost to XPeng’s capacity and to keep up with the increasing demand for electric vehicles.

Strategic Partnership – The company also announced in April it is entering into a strategic partnership with Zhongsheng Group, an established automotive dealer in China. This partnership gives XPeng immediate access to superior sales and after-sales capabilities.

Is Now the Time to Buy XPEV Stock?

Despite a slow start to 2021, XPeng stock has rewarded investors that have stuck with them for the long term. If you were to invest in XPEV around its IPO date last year, you would still be up over 75% on your investment in less than a year. Since then, investors haven’t been so lucky.

There is a lot of exciting development happening for XPeng and its investors. As time goes on, we will see if the smart electric vehicle maker can withstand the competition and continue its dominant growth in the market.

The electric vehicle market in China and the rest of the world is just heating up. XPeng Stock price has a lot of potential to continue generating returns for its investors. However, with China’s new five-year plan being introduced, it may put a cap on the company’s growth.

With the company set to deliver its second-quarter results tomorrow, it should give us a clear understanding of where XPeng stock price is headed next. For more information about Xpeng stock, renewables and more, sign up for our free Profit Trends e-letter today.


About

Pete Johnson is an experienced financial writer and content creator who specializes in equity research and derivatives. He has over ten years of personal investing experience. Digging through 10-K forms and finding hidden gems is his favorite pastime. When Pete isn’t researching stocks or writing, you can find him enjoying the outdoors or working up a sweat exercising.

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