China’s EV Market Is Blossoming and Xpeng Is Ready to Roll
InvestorPlace - Stock Market News, Stock Advice & Trading Tips XPEV stock is preparing to break through a critical resistance area as Xpeng's delivery data and fiscal results show rapid...
Oddly enough, China-based electric vehicle (EV) maker Xpeng (NYSE:XPEV) often seems to get left out of the conversation on Wall Street. There really ought to be more buzz — and higher prices — when it comes to XPEV stock.
This might be due to some folks’ reluctance to invest in Chinese stocks. Perhaps they’re concerned about the potential for strict government-imposed regulations.
Sometimes, the best way to allay the skeptics’ fears is by showing them the facts and the hard data. For one thing, China is exceptionally EV-friendly, and the market is primed for penetration by an ambitious company like Xpeng.
Besides, Xpeng has the fiscal stats and delivery numbers to back up the bull thesis. So, don’t be surprised if this EV-industry contender moves into the fast lane and rewards loyal shareholders with outsized returns in 2022.
A Closer Look at XPEV Stock
In 2021, the clear-cut resistance level for XPEV stock has been $55. For short-term traders, this would be a good place to consider taking some profits. On the other hand, if you believe in Xpeng’s growth story, then you might take more of a long-term, buy-and-hold approach. In that case, you can target much higher share prices, like $80 and even $100.
The 52-week low for XPEV stock is $22.73, but you might be waiting forever if you’re looking to buy at that price. Instead, consider something more realistic, like $35. The stock has bounced off of $35 on multiple occasions, so there appears to be some support at that level.
Regardless of your time frame and overall strategy, just remember that Xpeng is a relatively small company, and is thus a speculative investment. Therefore, please maintain moderate position sizes at all times.
Seeing an Explosion
If you’re still hesitant to get involved with China’s burgeoning EV market, you might want to heed the words of Brian Gu, president and vice chairman of XPeng.
He certainly has a close-up view of this market, day in and day out. “This year we certainly saw an explosion of EV penetration,” Gu recently said.
Gu continued by quantifying this explosion/penetration: “So let’s say a year ago, it’s a roughly 5% penetration. And as of late, [that] figure… is close to 19%. That’s a dramatic increase over the course of probably 15 to 18 months.”
Here are some more facts and figures. In November, Chinese consumers purchased 339,000 new-energy vehicles, including battery-electric and plug-in hybrid passenger cars.
That’s a 16.8% month-over-month increase. Furthermore, between January and November of this year, nearly 3 million electric cars were sold in China.
Plus, EV adoption in China grew 177.6% during that time frame, on a year-over-year (YoY) basis.
Delivering the Data
Clearly, Xpeng was on the right track in Q3 2021, financially speaking:
- 25,666 vehicle deliveries, up 199.2% YoY
- Quarterly total revenues of 5,719.9 million RMB, up 187.4% YoY
- Impressive quarterly gross margin of 14.4%
The triple-digit percentage increases continued with Xpeng’s November delivery data:
- 15,613 vehicles delivered, up 270% YoY
- 7,839 P7 smart sports sedans delivered, up 187% YoY
- 82,155 total vehicles delivered year-to-date, up by a whopping 285% YoY
- Cumulative vehicle deliveries reached 121,953 at the end of November 2021
Let’s put this into perspective. Maybe 121,953 might not sound like many vehicle deliveries for a company, but Xpeng is still in its early phases as a business.
In other words, there’s much more room for expansion and improvement in 2022.
The Bottom Line
As Gu pointed out, China’s EV industry is growing quickly. We’ve provided plenty of data points today to back up this thesis.
Nevertheless, it feels as if Xpeng just doesn’t get enough attention on Wall Street.
Now is the time for enterprising investors to open their minds to the explosive growth of China’s EV sector – and to XPEV stock as an opportunity for forward-thinking traders.
On the date of publication, David Moadel 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.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.
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