Down 74% This Year, What’s Next For Xpeng Stock?

XPEV: XPeng logo
XPEV
XPeng

U.S. listed Chinese EV player Xpeng (NYSE:XPEV) stock continues to witness a sell-off. Over the last month, the stock has declined by about 26% amid concerns about interest rate hikes, continued high inflation, and signs of a weakening global economy. Xpeng’s Q2 results, published late last month, also disappointed investors with the company posting a wider than expected net loss. While Xpeng’s margins trended lower due to cost pressures, its delivery outlook for Q3 was also muted, as it projected just 13% to 21% year-over-year growth for the quarter. Overall, Xpeng stock now remains down by about 74% year-to-date and its performance has been much worse than rivals. For perspective, Nio (NYSE: NIO) is down by about 48% year-to-date, while Li Auto (NASDAQ:LI) stock is down by about 20%.

Now, although Xpeng’s near-term outlook is weak, the company has grown its deliveries rapidly thus far in 2022. It delivered over 90,000 cars through the first eight months of the year, an increase of over 90% versus last year. A near-term catalyst for the stock could come as the company begins deliveries of the new G9 SUV which begins in October. XPeng took about 22,000 reservations for the vehicle just about an hour after it was unveiled earlier in the summer. Xpeng also has high expectations of the new vehicle and anticipates that sales of the G9 will eventually exceed those of its P7 sedan (the P7 saw about 16,000 deliveries over Q2).  Moreover, overall EV demand and favorable regulation in China remain a big tailwind for Chinese EV players, in general. During the month of August, sales of new energy vehicles – a broad term that includes hybrids, EVs, and fuel cell vehicles – rose by over 2x versus last year in China. Xpeng’s valuation also looks very compelling given its growth prospects, with the stock trading at just about 2x consensus 2022 revenue and a little over 1x 2023 estimates.

Check out our analysis on Nio, Xpeng & Li Auto: How Do Chinese EV Stocks Compare? for more details on how Xpeng stock stacks up versus its peers Nio and Li Auto.

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What if you’re looking for a more balanced portfolio instead? Our high-quality portfolio and multi-strategy portfolio have beaten the market consistently since the end of 2016.

Returns Sep 2022
MTD [1]
2022
YTD [1]
2017-22
Total [2]
 XPEV Return -28% -74% -69%
 S&P 500 Return -6% -22% 66%
 Trefis Multi-Strategy Portfolio -9% -23% 203%

[1] Month-to-date and year-to-date as of 9/28/2022
[2] Cumulative total returns since the end of 2016

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