Right now, the electric vehicle (EV) industry is riding high on record delivery numbers and positive investor sentiment. True, the industry has suffered in the past few months due to the chip shortage, but it looks like the crunch is nearly over and EV manufacturers are ready to boom. After the IPO in August 2020, EV manufacturer Xpeng (NYSE:XPEV) has been firing on all cylinders. In less than a year since its debut on the stock market, XPEV stock is up over 75%.
That said, XPEV stock is down 11% over the last month and down roughly 15% over the past week. Still, I think Xpeng is one of the top EV companies out there and that it will achieve huge success in the coming years.
As China continues to dominate the EV industry, Xpeng has a massive market to cater to and tremendous potential for growth. So, with that in mind, let’s take a look at the investment case for XPEV stock.
XPEV Stock: Stylish New Products Will Drive Growth
The products behind this EV maker are one reason to like XPEV stock. For example, Xpeng has received an outstanding response on its new P5’s presale. The company set a presale price range of $25,000 to $35,000, after subsidies. Moreover, the P5 Smart Sedan will be made available in six versions and the lidar equipped version comprises “the majority of the orders so far.”
To be sure, the P5 definitely adds to Xpeng’s impressive product portfolio, with sophisticated autonomous driving (AD) features. It’s also a milestone development, being the first mass-produced electric vehicle with lidar. (Essentially, lidar uses light via lasers to map the environment for AD.)
Additionally, though, Xpeng recently launched the G3i Smart SUV at a price range of around $23,000 to $28,000, after subsidies. Delivery for the G3i is expected to start in September. Basically, the vehicle is an updated version of the G3, with a new AD system as well as an upgraded infotainment system.
Cleary, these new products will offer more options for customers and further Xpeng’s growth.
Potential Beats in Q2 and Wall Street Love
Products aside, though, Xpeng is expected to announce second-quarter results soon and I believe it will beat analyst estimates in sales and revenue. After all, the company has already exceeded delivery targets, reporting its “highest-ever monthly deliveries in June.” More specifically, the company delivered 6,565 EVs last month, a 617% rise year-over-year (YOY). Moreover, total Q2 deliveries came to 17,398 vehicles.
These stronger-than-expected sales numbers — despite the chip shortage, mind you — throw light on this company’s potential to grow. So, when Xpeng reports its Q2 results, the revenue numbers should surely impress.
Currently, Citi analyst Jeff Chung has a “buy” rating for XPEV stock. Chung gives it a price target of $56.30, citing that the company’s deliveries and sales mix have both beat the consensus. Further, Tipranks shows a strong buy rating from five analysts, with an average price target of $52.50.
The Bottom Line on XPEV Stock
Xpeng was recently listed on Hong Kong Stock Exchange. It has also been added to the Hang Seng Composite Index. This will add liquidity to the company and increase its investor base.
All in all, I believe that Xpeng has strong potential to expand its market and add new users. The company has a wide product portfolio and also develops solid AD technology. And despite the competition in the industry, it’s nowhere close to slowing down. If the company beats revenue projections, XPEV stock will soar.
So, Xpeng is well-established in the crowded EV market and is making its presence felt. With strong growth prospects and shiny new products at its side, XPEV stock is a buy.
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.