Boston-based XL Fleet (NYSE:XL) is known as an electric powertrain provider for commercial vehicles. Since the company recently completed its reverse merger with shell company Pivotal Investment, traders have quickly moved the XL stock price in both directions.
The ride up was exhilarating, but the crash was unnerving. Some folks might be tempted to give up all hope that XL stock will return to its peak price.
I would contend that it’s too early to decide that XL stock will never recover. The commercial fleet electrification market is really still in its infancy. As the market expands, XL Fleet could grow along with it.
Besides, a lower price in XL Fleet stock isn’t necessarily a bad thing – unless you chased the stock when it was expensive, a strategy which I generally don’t recommend.
A Closer Look at XL Stock
To start off, let’s just say that XL stock is a fast mover. I’ll give you a quick example now. On Jan. 22, the stock price gained 9.43%, and there have been bigger daily moves than that.
Of course, not every day is a good one when it comes to XL stock. It’s a high-beta stock that’s not appropriate for low-risk portfolios. And if you do wish to make an investment, please keep your position size small.
That being said, it was amazing to witness XL stock power its way up from the $10 area to a 52-week high of $35 last year.
But then, it was horrifying to watch the stock price plummet below $20 in December and January. As of Jan. 22, XL stock settled at $21, so perhaps the share price is starting to stabilize.
On the other hand, “stabilize” is a relative term. We should certainly expect the outsized daily price moves to continue. At the same time, it’s worth noting that XL stock’s price point is more attractive for prospective value-seeking buyers than it was during the hype phase.
Established Track Record
Some stocks in the electric vehicle space are highly speculative because they represent companies that aren’t established in their niche.
Thankfully, XL Fleet doesn’t fall into that category. This company is already establishing itself as a market leader in the field of commercial fleet electrification.
Certainly, some skeptics will want to dispute that claim. Yet, it’s hard to argue with these numbers:
- Over 10 years of experience
- 200+ fleet customers
- More than 3,000 vehicles on the road using XL Fleet’s technology
- 130+ million miles driven
- A 12-month sales pipeline exceeding $220 million
- Diverse base of customers operating over a million vehicles globally
- Nine product models available and announced
- 4,284 projected cumulative units sold in 2020
- 9,234 cumulative units expected to be sold in 2021
Clearly, XL Fleet’s business isn’t based on a pipe dream. Based on the data, the company is well-positioned to drive the fleet de-carbonization movement.
High Price Targets
Famous short seller Citron Research is known for issuing harsh commentary and low price targets. So, it’s noteworthy when Citron released a bullish call.
That actually happened when Citron set its price target on XL stock for $60. The analyst firm also asserted that the total addressable market for XL Fleet is more than $1 trillion.
With that, Citron declared that “Electrification as a Service (EaaS) will be massive” while noting XL Fleet’s “Blue chip customer base.” Ultimately, Citron concluded that “this story has great Risk/Reward.”
Meanwhile, BTIG analyst Gregory Lewis initiated his coverage of XL stock with a “buy” rating and a price target of $30. That’s more modest than Citron’s price target, but it still suggests significant upside potential for XL shares.
The Bottom Line
There’s no need to freak out just because the share price of XL stock went down.
XL Fleet’s track record is rock-solid, and the future looks bright for this emerging leader in the fleet electrification niche.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article.
