What’s New With XPeng Stock?

XPEV: XPeng logo

XPeng stock (NYSE:XPEV) has fared well this year, rising by about 13% year-to-date. So what’s happening with the company? Now Xpeng’s Q4 2022 results, which were published earlier this month, fell short of estimates. Revenues for the quarter came in at about $745 million, a decline from about $1.3 billion in the year-ago quarter, amid rising competition and price cuts by EV bellwether Tesla in China. XPeng’s deliveries over Q4 fell 47% year-over-year to 22,204 vehicles. Moreover, net losses widened to about $0.20 per share, from about $0.12 a year ago. Things are likely to remain rough over Q1 2023 as well, with the company expecting deliveries to fall further to 18,000 and 19,000 in the first quarter.

That said, the company says that there are signs that things are getting better, with orders for February rising by about 2x versus January. Other indicators of interest, such as the number of test drives and buyers coming to stores, also apparently hit a high following the launch of the updated P7i vehicle earlier in March. Moreover, the company is also looking to cut back on costs, while optimizing its product portfolio. The company has also cut prices on some models by over $5,000.

So is XPeng stock a buy at current levels of about $11.50 per share? We think so. With China easing its zero-Covid policy after over two years of stringent lockdowns, automotive sales, and consumer spending, should pick up. China’s Purchasing managers index – an indicator of manufacturing activity – hit an 11-year high in February. Moreover, overall EV demand and favorable regulation in China remain a tailwind for Chinese EV players. Although national-level subsidies are receding, provinces are looking to make EV purchases more attractive. Over 2022, deliveries of new energy vehicles – a broad term that includes hybrids, EVs, and fuel cell vehicles – rose by over 2x versus last year. This could help XPeng. XPeng’s valuation is also reasonable, with the stock trading at about 1.8x forward revenues, which is well below the likes of Tesla (which trades at about 6x forward revenue). 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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Returns Mar 2023
MTD [1]
YTD [1]
Total [2]
 XPEV Return 26% 13% -74%
 S&P 500 Return 2% 5% 81%
 Trefis Multi-Strategy Portfolio -2% 5% 232%

[1] Month-to-date and year-to-date as of 3/31/2023
[2] Cumulative total returns since the end of 2016

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