The year 2024 was not a great one for Chinese electric vehicles (EV) even though most companies continued to increase their production. Xpeng’s (NASDAQ: XPEV), stock fell by more than 52% in the past year, while Nio (NIO), Li Auto(LI), Zeekr(ZK) and Lotus Technology (LOT), stocks dropped by over 45%.
In the last three years Nio’s and Xpeng’s shares have fallen by 89%, 81.50% and respectively. These companies lost billions in value due to the rising risks of their future. Xpeng is going to be the focus of attention next week, as it will publish its financial report on the 20th August.
Xpeng has many positive aspects but also some risks
Xpeng and other Chinese EV companies face several challenges which threaten their existence. The first is the increased competition on their own market, as there are hundreds of electric vehicle companies in China. These firms have cut prices in order to be competitive, and this has affected their margins.
These firms also face a hostile reception on the world’s most important markets, such as Europe and the United States. US tariffs of about 100 percent have been implemented on all Chinese electric vehicles imported, while Europe added an additional 25%. Since Xpeng has no plants in those countries, its growth will be slow.
The third and most important thing to note is that while EVs are growing faster, it is clear the momentum has increased. Tesla, which is often regarded as the industry’s gold standard, reported falling sales for two consecutive quarters. Most buyers now prefer hybrids to battery-electric vehicles.
The company still has two positives. The cost to build EVs is down, thanks in part to the falling prices of lithium, nickel, and cobalt. Copper and aluminum, which are also important metals in manufacturing, are on the decline.
The company also aims to increase its share of the market in foreign countries. This is especially true in Asia and the Middle East.
Earnings ahead
On Tuesday, Xpeng will release its latest quarterly results.
The company’s latest results show that the number of vehicles delivered in July increased by only 1%, to 11,145. This confirms that growth is slowing.
It sold 9,393 and 10,146 vehicles in April and May, respectively. In total, the company’s deliveries for the first six months of this year increased by 26%, to 52 028.
Xpeng expects its sales to continue increasing this year, as the Mona M03 launches in August.
Recent results show that revenue growth continued in Q1 despite the challenges faced by the industry. The company’s revenues jumped 62.3%, to more than $0.77 billion in the first quarter.
Xpeng’s gross margins also increased to 12.9%, up from 1.7% for the same quarter of 2023. Analysts expect Xpeng to have increased its revenues by over $64%, or $1.14billion in Q2, based on the company’s delivery figures. Analysts expect Xpeng’s revenues to reach $6 billion for the entire year. This is a 39 percent increase over the same time period of 2023.
Xpeng has beaten analyst estimates for the past two quarters in a row, which means that this trend could continue.
Take note of the key risks
Xpeng is aiming to be a major force in the automotive industry. It has had a successful few years. Volkswagen made an investment in the company this year.
The company has increased its production capacity, and its losses are decreasing. Its net loss in Q1 was about RMB1.37bn, down from RMB2.34bn a year ago. This means that the company has done well in reducing its costs, as it is expected sales to be slow.
Cash is the king for EV firms as the conditions continue to worsen. This explains why companies like Mullen Automotive, Faraday Future, and others are in trouble. Xpeng’s cash has been decreasing in recent months, but it still has enough cash to run for two years. Xpeng ended its last quarter with more than $2 billion of cash and other equivalents. It also had $423 millions in restricted cash as well as $1.6 billion short-term deposit.
Stock price forecast for Xpeng
The daily chart shows that Xpeng stock is down ahead of Tuesday’s earnings. The stock has found strong support around $6.61, which was its low point from April of last year. The bears have a little fear of selling below this level.
Xpeng stock is still below its 50-day and the 100-day exponential moving averages, indicating that bears remain in charge. The stock has fallen below $7.16, the critical support level. This was its low point in July.
The outlook is therefore neutral for the stock ahead of earnings. It is most likely that it will fall below $6.6 support and continue its downward trend. With so many negatives already priced in, it is likely that the stock will rebound to its resistance level of $7.75. This would be its 50-day average.
The post Xpeng Stock Price Sits At A Key Support: August 20 Will Be Key may be updated as new information becomes available
This site is for entertainment only. Click here to read more
