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XPeng Stock Is a Buy on Strong Numbers and Solid Market Position

XPeng (NYSE:XPEV) stock is benefitting from the growing popularity of EVs in China.

Xpeng logo and P7 model in store XPEV stock
Source: Andy Feng / Shutterstock.com

Despite the strong competition in the industry, the company has enjoyed a central place in the market and is growing with regard to delivery numbers and sales.

XPEV stock has shown volatility lately. It was trading at a low of $23 in May and soared to $45 in June. The stock has been declining since then and is currently exchanging hands at $34.

I think it is ready for a correction and could rise along with other EV stocks. 

I believe XPEV stock will surge in the coming months and it is one EV stock to own for the long term. Let’s take a look at my investment case for XPEV stock.

XPeng recently released the September vehicle delivery numbers and they are impressive. The numbers are record high for the automaker and it shows that the company has the potential to grow.

It reported the highest ever monthly deliveries at 10,412 EVs. It is a 199% rise year over year. The EV maker shipped a total of 25,666 units for the quarter, which is a 48% rise quarter over quarter. 

Despite the chip shortage that affected all EV makers, Xpeng was able to report strong delivery numbers. It is proof that consumers are enjoying the EVs and that there is a growing demand for its P7, a super long-range smart sedan.

The revenue numbers for this quarter will reflect the strong performance of XPeng. 

The company estimated third-quarter deliveries between 21,500 and 22,500 which would be a rise of 150% to 162%. However, it has already exceeded the projections and delivered more than the estimated numbers.

The numbers clearly show the strength and potential of the company in the growing EV market. 

Price Advantage 

XPeng enjoys a price advantage in the market. Its average selling price is around $30,000 for the low range which makes it a top choice of buyers.

It has become a leading mid-tier to low-premium EV manufacturer in China.

When compared to the other EV makers in China, XPeng offers top-class EVs in a lower price range. Its new P5 sedan costs much less than what consumers would pay for Tesla (NASDAQ:TSLA). It is also the first production car that comes with an automotive-grade lidar. 

At this price point, XPeng certainly enjoys an advantage over its competitors and it will be able to cater to a wider market. It does not restrict itself to the premium consumers but is expanding its share in the low to the mid-market segment without compromising on the quality and service. 

The company has gained the necessary manufacturing experience in very little time and has managed to build its own production facilities. It is also expanding the facilities in order to meet the growing demand. It does not rely on third parties for production.

By the end of this year, XPeng will be able to expand the production capacity and report stronger delivery numbers. It has started the expansion of the manufacturing unit in Zhaoqing to increase the production capacity from 100,000 to 200,000 cars annually by mid-2022. 

The Bottom Line on XPEV Stock

XPEV stock is a strong one to own at the current level. It is trading at a discount and the company’s revenue is expected to continue to rise aggressively.

XPeng has proved its worth time and again with stellar delivery and revenue numbers. In the next five years, XPeng could be one of the top EV makers. It also has the potential to become profitable over the next two to three years.

If you are looking for an EV stock to add to your portfolio, XPEV stock is a safe bet. 

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.


Article printed from InvestorPlace Media, https://investorplace.com/2021/10/xpev-stock-is-a-buy-on-strong-numbers-and-solid-market-position/.

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