Shares of Chinese electric vehicle maker Xpeng Motors (NYSE:XPEV) are trending higher after the company delivered stronger-than-expected earnings.
Xpeng stock stock is up 10% in morning trading after the company announced strong earnings and provided a bullish forecast for its fourth-quarter deliveries. Today’s gains build on a 65% increase in shares over the past six months. Xpeng stock now trades hands at $47, up from less than $30 at the end of May.
How is this possible? Xpeng Motors is capitalizing on strong demand for electric vehicles in China as well as positive investor sentiment following a recent string of successful initial public offerings (IPOs) among electric vehicle startups.
What Happened With Xpeng Stock
Xpeng Motors reported that it delivered 25,666 cars in the three months that ended on Oct. 31, which was a 200% increase from the same period of 2020. Those deliveries fueled a 187% surge in Xpeng’s revenues to 5.72 billion yuan, which was far ahead of the consensus forecast of 4.8 billion yuan. Xpeng also reported a loss of 27 cents per U.S.-listed share, which beat analysts’ forecast by 6 cents. While the earnings results were extremely positive, investors especially liked that Xpeng forecast that its deliveries in the current fourth quarter are likely to range between 34,500 and 36,500 electric vehicles.
Just last week, Xpeng introduced a new fully electric sport utility vehicle (SUV) for global markets called the G9. The company said it will feature a semi-autonomous driving system, which is exciting to investors. Early reviews of the G9 have been positive, with some analysts claiming that Xpeng is fast becoming the main competitor of market leader Tesla (NASDAQ:TSLA). Xpeng has made clear that it has ambitions to grow beyond its home market of China.
“In the third quarter, we continued record-setting growth with the highest vehicle deliveries among China’s startup new energy vehicle automakers,” said Xpeng CEO He Xiaopeng in a news release.
Why It Matters
The electric vehicle market is red hot right now following the blockbuster IPO of Rivian Automotive (NASDAQ:RIVN). RIVN shares are up 17% since its market debut on Nov. 10, and had been up more than 50% in recent days. At the same time, shares of Tesla have risen 15% in the past week as a rising tide seems to be lifting all electric vehicle stocks higher.
XPEV stock has also been gaining ground, and its latest earnings and Q4 forecast are likely to keep the share price moving upwards. Investors it seems are singling out Xpeng as a leading EV maker within China, and potentially beyond the nation of 1.4 billion people.
Equally impressive has been Xpeng Motors’ ability to manage the current worldwide shortage of semiconductors. Automakers have been struggling with a chip shortage that has hobbled some companies’ abilities to deliver cars to customers. Xpeng is bucking that trend, stating that the chip shortage’s impact on its operations has been “limited” so far. In fact, its total cumulative deliveries crossed 100,000 at the end of October. This year, Xpeng Motors has delivered 66,542 electric vehicles, a 289% year-over-year increase.
What’s Next for Xpeng Stock
Investors clearly like what they’re hearing from Xpeng Motors. Xpeng stock has been going gangbusters lately and the winning streak looks set to continue following better-than-anticipated earnings and strong forward guidance. The success of Xpeng Motors’ stock is also likely to help keep all electric vehicle stocks buoyant as we head into the Thanksgiving holiday. Investors looking for exposure to the electric vehicle sector and to capitalize on the current rally should consider taking a position in Xpeng Motors, one of China’s best automotive companies.
On the date of publication, Joel Baglole 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.