Xpeng Inc: Will This EV Stock Double Again?

XPEV Stock Delivering Huge Returns

Thanks to a red-hot stock market, many companies chose to go public over the past year. One of them was Chinese electric vehicle (EV) manufacturer Xpeng Inc (NYSE:XPEV).

Xpeng completed its initial public offering (IPO) on the New York Stock Exchange on August 27, 2020. It had an IPO price of $15.00 per American depositary share (ADS) but opened well above that price. In the first few days on the market, it was trading well into the $20.00 range.

After the initial surge, however, it pulled back to the teens. And that’s when I wrote the article “Xpeng Inc: Why This New EV Stock Could Be Huge.”

When I wrote that article, XPEV stock was trading around $18.00 per share. Today, it’s at $40.85, marking an increase of more than 125%.

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If you’ve been following the stock market, you’ll know that, while EV stocks have been some of the hottest tickers, they don’t always go up. In fact, the pullbacks can be just as strong as the rallies.

So, considering that XPEV stock has already more than doubled, is it time to move on to other EV stocks?

Well, if you look at what the company has been doing, you’ll see that Xpeng Inc’s growth story could be just getting started.

Xpeng Inc (NYSE:XPEV) Stock Chart

Chart courtesy of StockCharts.com

Xpeng was founded in 2015 in Guangzhou, China. The company made its debut at the Guangzhou International Automobile Exhibition in November 2018, unveiling its direct sales and service platform, as well as its supercharging network.

In December 2018, Xpeng Inc launched the “G3,” an electric compact SUV with a starting price (post-government subsidies) of RMB146,800 ($21,000).

As any longtime EV stock investor would know, an electric car can take quite some time from introduction to production. But Xpeng moved very quickly. By June 2019, the company had already produced 10,000 G3 models.

In April 2020, Xpeng Inc launched the “P7” smart sports sedan, which started at RMB229,900 ($33,000) post-subsidies. The P7 can travel up to 439 miles on a single charge. Its long range made the model stand out in China’s EV marketplace.

Mass-delivery of the P7 began in July 2020, and by October of the same year, 10,000 P7 models had rolled off the production line.

Fast-forward to today and the company continues to ramp up production and deliveries.

According to the company’s latest earnings report, Xpeng delivered 17,398 vehicles in the second quarter of 2021, representing a 439% increase year-over-year and a 30.4% increase sequentially. (Source: “XPeng Reports Second Quarter 2021 Unaudited Financial Results,” Xpeng Inc, August 26, 2021.)

Although XPEV stock has come down quite a bit from its highs earlier on, Xpeng’s second-quarter deliveries set a record high for the company.

Deliveries of the pricier P7 model totaled 11,522 in the second quarter of 2021, reaching a record quarterly high and marking a 44.5% increase from the first quarter.

Moreover, the company presented the third model of its “P5” brand in April. P5 is a compact family electric sedan offered as a cheaper and smaller alternative to the flagship P7. Pre-sales for the P5 started in July 2021, and the company plans to officially launch the model in China in September, with deliveries starting in the fourth quarter of 2021.

As the company has sold more EVs, it has earned a lot more revenue. In the second quarter of 2021, Xpeng Inc’s total revenue was RMB3,761.3 million ($582.5 million). That was up by 536.7% year-over-year and 27.5% quarter-over-quarter.

Furthermore, the EV company reported a gross margin of 11.9% for the second quarter of this year. To put that in perspective, its gross margin in the second quarter of 2020 was negative-2.7%.

Analyst Take

Like many EV companies, Xpeng Inc isn’t profitable just yet. That’s why, even as the company grows its business at an incredible pace, its stock price can make big swings to either side.

Going forward, XPEV stock will likely remain a high-risk, high-reward play.