If you had never heard of XPeng (NYSE:XPEV) and I told you that it delivered a record number of electric vehicles (EVs) in June, I’m confident you would be shocked XPEV stock is down almost 9% year-to-date (YTD).
Unfortunately, it’s true. And to add insult to injury, the KraneShares MSCI China Clean Technology ETF (NYSEARCA:KGRN) is up almost 9% in 2021 even with XPEV stock among the top five holdings in its 44-stock portfolio.
The Chinese EV manufacturer delivered 6,565 vehicles in June, 617% higher than a year earlier, and its highest monthly deliveries on record. To make matters worse, XPeng sold $1.8 billion worth of stock on the Hong Kong Stock Exchange on July 6 under a dual-primary listing, which means it’s subject to both U.S. and Hong Kong regulators.
I say worse because you would think U.S. investors would like the fact a Mainland China business is opening its books to two sets of regulators. Transparency is a good thing. Or, so you would think.
Nothing seems to be able to keep XPEV stock above $50 for very long. Not even good news.
What does XPeng have to do over the final five-plus months of 2021 to get to $50 — and stay there?
Keep doing what it’s doing.
Turning Car Customers Into XPEV Stock Holders
I thought XPeng President Brian Gu had an interesting observation recently about the company and its stock.
“[W]e would like to have a listing venue that get[s] us closer to home because we’re a consumer brand in China. Ultimately we want our customers to be our shareholders, and having the dual primary listing status in HK (Hong Kong) will give us eligibility to be connected to Chinese capital markets.”
The key to Gu’s comments is that XPeng wants its customers also to be shareholders. I call this “Everyday Investing.”
This is the act of owning the products and services you use frequently, whether daily, weekly or some other frequency. I first broached the subject on InvestorPlace in April 2012 in an article about General Electric (NYSE:GE).
While GE’s gone through a whole lot of pain since, I stand by my belief that if you own products you swear by, assuming that the company is publicly traded and the financials are good, you ought to consider at least owning their shares.
Consumers are investors, and investors are consumers. So XPeng is right to woo its customers as shareholders. You can’t get much more loyal than somebody plunking down many thousands of dollars on a car.
The only thing I can think of that requires more loyalty is buying a new home. So, as Everyday Investing goes, if you bought a new house built by Lennar (NYSE:LEN), and you have the money to invest, Lennar stock makes a whole lot of sense over the long haul.
But I digress.
Keep Delivering Cars
XPeng revealed its P5 sedan in April — while pre-orders started in the spring, deliveries won’t start until sometime in Q4 2021 –bringing its vehicle lineup to three, the other two being the P7 sedan and G3 SUV.
The P5 brings a ton of technology to the vehicle, including its XPILOT 3.5 autonomous driving system and auto-grade lidar technology. It’s bound to be a big seller.
So, through the first six months of 2021, XPeng’s delivered 30,738 vehicles, 459% higher than the first six months of 2020. In Q2 2021, it delivered 17,398 vehicles, 439% higher than Q2 2020.
Over the course of approximately 12 months, XPeng’s delivered 34,588 P7s. On July 9, the car maker revealed the G3i SUV, a refresh of the G3. It will cost between $23,121 and $28,678 after subsidies. Deliveries start in the fall.
From a shareholders’ perspective, I don’t think there’s much more you can ask of the company. It’s delivering and then some. Heck, XPEV stock will be added to the Hang Seng Composite Index and several sub-indexes on July 20.
That’s sure to bring more attention to the EV maker’s stock.
The Bottom Line
At the beginning of June, the last time I wrote about XPeng, I wondered if its stock was dead money. I suggested that patient investors might be able to pick up some of its shares in the mid-$20s. At the time, it was trading around $34, having rebounded nicely in the last two weeks of May.
Now trading just below $40, it’s got to move about 10% higher and stay there, to finish in positive territory for the year.
The stock has fooled me on several occasions over the past year. When I thought it would drop some, it went higher. When I thought it was a good time to buy, it dropped instead.
Ah, you have to love stock prognostication. It’s definitely not an exact science.
Should you buy it for $40? All I can say is that three to five years down the road, I don’t think you’ll regret it. However, all of the EV stocks have proven very volatile. So it wouldn’t shock me if you got a chance to buy in the low $30s or high $20s at some point this year.
Long-term, I like XPEV stock a lot.
On the date of publication, Will Ashworth 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.
Will Ashworth has written about investments full-time since 2008. Publications where he’s appeared include InvestorPlace, The Motley Fool Canada, Investopedia, Kiplinger, and several others in both the U.S. and Canada. He particularly enjoys creating model portfolios that stand the test of time. He lives in Halifax, Nova Scotia. At the time of this writing Will Ashworth did not hold a position in any of the aforementioned securities.