XPeng: Why This EV Stock Is a Solid Long-Term Buy?
September 09 2021 - 2:35PM
Finscreener.org
One of the lesser-known players
in the electric vehicle space is XPeng (NYSE:
XPEV), a company valued at a market cap of $33.75
billion. XPeng stock
began trading on the NYSE
last August and has since returned
71% to shareholders in just over a year. Despite these
market-beating gains, XPeng stock is down 46% from record
highs.
Chinese stocks listed on North
American exchanges have grossly underperformed their peers due to
the recent crackdown of the government on tech companies. However,
China remains the largest electric vehicle market in the world,
making XPeng a top bet for long-term investors right
now.
An overview of XPeng
Xpeng was founded in 2015 and the
company designs, develops, and manufactures smart electric vehicles
in China. It is popular for automobiles such as the G3 which is an
SUV and a four-door sports sedan called the P7. These EVs are
targeted towards the tech-savvy middle-class consumer in
China.
XPeng aims to optimize the
customer’s mobility experience and enable rapid product iteration.
To achieve its goal the company has focused on developing a
full-stack intelligent driving technology, in-car intelligent
operating system, and core vehicle systems in-house. Its
proprietary software, core hardware, and portfolio of data
technologies ensure XPeng can effectively deploy these innovative
products.
It also has an omni-channel sales
model which integrated online marketing strategies with a physical
sales and service network. At the end of June 2021, Xpeng had an
expansive network of 147 sales stores and service centers. Its
manufacturing plant in Zhaoqing has an annual capacity of 100,000
units.
Strong quarterly results
In the second quarter of 2021,
XPeng reported revenue of $582 million and a loss per share of
$0.21. Analysts forecast the company to post revenue of $532 million and a loss per share of
$0.19.
XPeng’s vehicle deliveries
totaled 17,398 in Q2 which was a quarterly record and 439% higher
than the 3,228 vehicles delivered in the year-ago period. It was
represented a sequential increase of 30.4% compared to Q1 of 2021.
In the first six months of 2021, vehicle deliveries rose by 459% to
30,738.
In the third quarter of 2021,
XPeng forecasts vehicle deliveries between 21,500 and 22,500 which
is generate between $743 million $775 million in sales.
XPeng’s gross margin stood at
11.9% in Q2 compared with a negative margin of 2.7% in the same
period of 2020 and 11.2% in Q1 of 2021.
The company confirmed that
vehicle deliveries in the first half of 2021 have already surpassed
total deliveries in CY 2020.
CEO and Chairman of XPeng, He
Xiaopeng said, “As EV adoption in China and around the world begins
to soar, we are excited to lead in this unprecedented disruption
opportunity with our outstanding vehicles and fast, seamless
iterations of new technologies that are shaping the mobility
experience of the future.”
XPeng stock valuation and more
Analysts tracking XPeng expect
sales in 2021 to more than triple year to over year to $2.84
billion. It’s then forecast to rise to $5.01 billion in 2022. This
will allow the company to narrow its adjusted losses from $1.23 per
share in 2020 to $0.42 per share in 2022.
This suggest XPeng stock is
valued at a forward price to 2022 sales multiple of less than 7x
which is quite reasonable given its growth forecasts. Analysts
tracking XPeng stock also remain bullish with an average price
target of $53.4 which is 50% above the current trading
price.
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