Down 85% From Its Highs, What Ails XPeng Stock?

XPeng stock (NYSE:XPEV) continues to underperform this year, declining by about 16% year-to-date. The stock also remains down by over 85% from its all-time highs seen in 2020. So what’s happening with the company? XPeng’s recent performance has been tough. Deliveries over Q1 fell by almost 47% from the same period a year ago, with revenues also falling short of expectations coming in at 4.03 billion Chinese yuan ($572 million), about 50% below last year’s figure. While the Chinese economy has seen a mixed recovery following the easing of Covid-19 restrictions late last year, EV sales have actually been on the rise, expanding by about 25% in Q1. This could mean that XPeng is actually being impacted by mounting competition from the likes of Li Auto – which has seen a surge in demand following the launch of multiple new versions of its range-extender EVs and also by Tesla, which has been reducing prices to spur demand in China. XPeng’s outlook also remains tough, with deliveries forecast at just between 21,000 and 22,000 for Q2, representing a year-over-year decline of over 36%.

There are a couple of things for XPeng investors to look forward to. XPeng does have new models such as the G6 SUV, which should see deliveries begin in the summer. The new SUV, which is expected to see pricing starting at about $28,000, is based on next-generation technology architecture and could stimulate interest in Xpeng’s product line. Moreover, the new tech architecture called Smart Electric Platform Architecture (SEPA) 2.0 is expected to reduce the cost of development and manufacturing for future models. However, this may not be enough to turn around the company’s stock.  Even at the current market price of a little over $8 per share, XPeng stock trades at 1.6x projected 2023 revenues, which could be perceived as high for an automaker that is seeing declining sales and remains loss-making. Check out our analysis on Nio, XPeng & Li Auto: How Do Chinese EV Stocks Compare? for more details on how XPeng stock stacks up versus its peers Nio and Li Auto.

What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market consistently since 2016.

 Returns Jun 2023
MTD [1]
YTD [1]
Total [2]
 XPEV Return 6% -16% -80%
 S&P 500 Return 2% 11% 91%
 Trefis Multi-Strategy Portfolio 4% 14% 259%

[1] Month-to-date and year-to-date as of 6/8/2023
[2] Cumulative total returns since the end of 2016

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The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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