Estimated read time: 3 minutes
Publication date: 9th Sep 2021 19:35 GMT+1
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.
Disclaimer: The writer is an experienced financial consultant who writes for Finscreener.org. The observations he makes are his own and are not intended as investment or trading advice.
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