In case you didn’t get the memo, there’s a global semiconductor supply shortage in progress. Knowing this, investors might be concerned about China-based electric vehicle (EV) maker Xpeng (NYSE:XPEV). They might even be tempted to dump their XPEV stock shares.
Personally, I feel that this would be a mistake. Xpeng shares are certainly down from their peak price, but an investment in the company isn’t “dead money” by any means.
As we’ll see, a prominent executive at Xpeng isn’t fazed by the chip shortage. If anything, he’s beaming with confidence, and he’s got the stats to back it up.
At the end of the day, current and prospective investors should just remain calm and stay focused on the big picture. Instead of exiting your long position, you just might find that there’s a prime buying opportunity here.
A Closer Look at XPEV Stock
On April 12, I gave a hearty recommendation on XPEV stock. At that time, the shares were trading at around $34 apiece.
Since I’m the unluckiest person on the planet, Xpeng shares immediately proceeded to drop like a rock. By May 13, they were down to $23.
Then, some sort of miracle happened. The buyers magically stepped in, and XPEV stock started to come back up.
By June 4, the stock was already trading at $37 and change. So, my flimsy reputation has been saved for the time being, as the share price is slightly higher than it was when I made that bullish call.
There’s still plenty of room for more upside here. Keep in mind that at one point during the past 12 months, XPEV stock went as high as $74.49.
Could the stock possibly reach that level again, amid a global microchip shortage?
Anything’s possible — especially when there’s ample data to support a bull run.
Delivering the Good News
For automakers, vehicle deliveries are of paramount importance. An argument could even be made that delivery numbers are the most important metric for these companies.
If that’s the case, then Xpeng should quell worried investors’ concerns as the company posted highly encouraging figures for the month of May.
Specifically, Xpeng delivered 5,686 vehicles in May, an increase of more than 500 vehicles over the 5,147 delivered in April.
May’s delivery number also represents the third monthly increase for Xpeng. Investors hoping to see growth should be quite satisfied with these results.
On top of all that, May’s addition brings Xpeng’s year-to-date deliveries to 24,173 units. That signifies a whopping 427% increase compared to the first five months of 2020.
Xpeng President Brian Gu took the opportunity to express optimism in regard to the full quarter’s vehicle deliveries, as well as the bigger picture for his company’s niche market.
“We are on track to meet or exceed second-quarter delivery numbers, which I think means Chinese EV demand is still very strong,” Gu commented.
A Matter of Time
Xpeng’s monthly delivery peak is around 6,000 vehicles. Without a doubt, the company’s stakeholders will want to see that number reached again and exceeded.
It really should just be a matter of time before that happens. Frankly, I wouldn’t be shocked if the 6,000-vehicle barrier is broken this summer.
As for the semiconductor shortage, Gu expects that it should start to ease later this year.
Overall, Gu seems to have positive expectations for the remainder of 2021.
“After a short pause during China New Year, the industry has rebounded very strongly and I think the whole year outlook is very, very strong as well,” Gu stated.
The Bottom Line
How long will it be before Xpeng delivers more than 6,000 vehicles on a monthly basis?
There’s no way to know for sure, but it shouldn’t take too long.
Xpeng’s president isn’t fazed by the global microchip shortage, and judging from the delivery data, investors shouldn’t be worried, either.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.