Saturday, November 28

Alibaba-Backed XPeng Sales Balloon 343%; Shares Pop 34%

Shares of XPeng Motors spiked 34% on Thursday as the Chinese smart electric vehicle company saw its quarterly sales more than quadruple spurred by strong car deliveries. The stock is up another 5% in Friday’s pre-market session.

XPeng’s (XPEV) third-quarter sales exploded 342.5% to RMB1.99 billion ($293.1 million) year-on-year. During the same reported period, deliveries surged 266% to 8,578 vehicles. In the month of October, deliveries totaled 3,040 vehicles, reflecting an increase of 229% from the same period last year.

However, XPeng posted a net loss of RMB2.03 billion ($306 million) in the three months ended Sept. 30 compared to the RMB982.6 million for the same period of 2019, which was mainly the result of higher operating expenses, including marketing, promotional and advertising expenses to support new vehicle sales.

“In our first quarter as a public company we achieved strong operating and financial results, highlighted by the rapid growth in deliveries of our P7 Smart EV,” said XPeng CEO He Xiaopeng. “Our commitment to innovation through end-to-end in-house R&D and data-driven capabilities is the cornerstone of our business. Looking ahead, XPeng will continue to capitalize on its core strengths in technology, while heightening sales and marketing efforts, further enhancing manufacturing capability, and developing our global strategy.”

XPeng, which listed its shares in the US in August, secured RMB4 billion in funding in September to support the development and construction of a smart EV manufacturing facility in Guangzhou.

Looking ahead to the fourth quarter, sales are forecasted to increase 244% to RMB2.20 billion ($332.4 million) year-on-year. XPeng has set itself a target to deliver about 10,000 vehicles this quarter, reflecting an 211% increase from last year.

Back in July, the company raised $500 million with a group of investors including Aspex, Coatue, Hillhouse Capital and Sequoia Capital China.

XPeng, which is backed by Alibaba, was co-founded in 2014 by Xiaopeng, former president of Alibaba Mobile Business Group, together with Xia Heng and He Tao, former technology leaders of Guangzhou Automobile Group Engineering.

Its shares, which began trading on the New York Stock Exchange after its $1.5 billion initial public offering at an offering price of $15 per ADS, closed at $44.73 on Thursday. (See XPEV stock analysis on TipRanks)

The stock has recently attracted ample attention as more analysts initiated its coverage. XPEV has picked up 7 recent back-to-back Buy ratings, which add up to a Strong Buy analyst consensus. Against this, the average price target stands at $30, implying 33% downside potential over the coming year.

Meanwhile, J.P. Morgan analyst Nick Lai recently raised the stock’s price target to $43 from $27 and reiterated a Buy rating, arguing that XPeng offers vehicles at “competitive prices” that “can capture a sizable and fast-growing addressable market.”

“We expect XPeng … to benefit from and lead China’s multi-year smart-EV trend, where we forecast penetration tripling from less than 5% in 2019 toward 13% or higher by 2025,” Lai wrote in a note to investors.

The analyst expects XPeng’s revenue to grow at a “robust” compound annual growth rate of 73% through 2025.

Credit: TipRanks

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