The high climate concerns across the globe have led to countries pushing for electric vehicles. There was a time when only Tesla (NASDAQ:TSLA) was a strong name in the EV industry, but the competition is growing and there is a surge in the number of automakers. One such EV pure-play startup is XPeng (NYSE:XPEV) stock.
The company is firing on all cylinders and giving stiff competition to Nio (NYSE:NIO). XPEV stock is trading close to $40 today, much lower than the all-time high of $74. The stock is up 45% over the past six months and has increased more than 120% over the last 12 months.
XPeng reported strong August delivery numbers despite the chip shortage and is eyeing global expansion. The company impressed shareholders with the Q2 results and its future looks bright. XPEV stock is a buy at the current level, and I believe it has the potential to soar higher in the coming months. It could certainly hit $50 in the next few months.
With that in mind, let’s dig deeper into the investment case for XPEV stock.
Stellar Delivery numbers
XPeng’s August delivery numbers are impressive. The company delivered 7,214 Smart EVs, which is a 172% rise from a year ago. It consisted of 6,165 P7s and 1,049 G3s. The year-to-date deliveries for 2021 reached 45,992 vehicles, a 334% rise from last year. The numbers are proof that consumers are enjoying their P7s and its demand is only growing. It achieved a record month in August with a 209% year-over-year increase.
The deliveries have been affected due to the semiconductor chip shortage but these numbers prove XPeng’s strength. Despite the shortage, the company could report a 172% year-over-year increase in deliveries and it is nothing short of a feat.
Rival Nio reported 5,880 vehicle deliveries in August, much lower than that of XPeng. The company also revised the delivery outlook for the third quarter keeping the chip shortage in mind. XPeng has made no such revision which shows that the company is confident of hitting the projected numbers.
XPeng expects deliveries ranging between 21,500 to 22,500 for the quarter, which is an increase of 150% to 162% rise from a year ago. It reported 8,040 vehicle deliveries in July. XPeng will only have to deliver close to 6,500 vehicles for September to hit the projected numbers. I believe it has the potential to do so and it will report impressive Q3 results.
Expanding The Fleet Of Cars
XPeng investors have a lot to look forward to. The company has already begun the transition production for the G3 SUV to G3i, which is a facelift version of G3, to the EV manufacturing base in Zhaoging. It will start G3i deliveries this month.
Further, the company will launch the P5 family sedan, which is the third production model this month and the deliveries are expected to begin next month. Considering the delivery plans of the company, it looks like there is nothing to worry about the chip shortage. XPeng has everything well laid out and it will be interesting to see the response of buyers towards P5.
With an increase in the product line, XPeng will be able to reach out to a larger consumer base and increase revenue and delivery numbers. It will also increase the market share of the company in the coming months.
The Bottom Line On XPEV Stock
XPeng’s growth is phenomenal, and it could soon overtake Nio in the revenue and delivery numbers. Neither of the companies is profitable yet but looking at the balance sheet, XPeng looks strong and stable.
The company has the potential to meet the projections for the third quarter and the widening of its fleet will attract more consumers.
XPEV stock has the potential to soar higher than $50 and it is a buy at the current level.
On the date of publication, Vandita Jadeja 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.
Vandita Jadeja is a CPA and a freelance financial copywriter who loves to read and write about stocks. She believes in buying and holding for long term gains. Her knowledge of words and numbers helps her write clear stock analysis.
