XPeng stock price analysis: technicals point to a 40% jump

The XPeng (XPEV) stock price has pulled back after peaking at $13.73 on September 30th as most Chinese companies were soaring. It retreated to $1o.8 on Monday, 21% below the year-to-date high, meaning that it is in a local bear market. It also remains 54% below its highest level this year. 

JPMorgan is bullish on XPeng

XPeng shares pulled back even after an analyst from JPMorgan lifted his target for the company. In a note, Nick Lai estimated that the stock would rise to $14 in the near term, implying a 30% jump from the current level. 

The analyst noted several catalysts for the stock. For example, he applauded the firm’s upcoming new product strategy like advancing its in-house technology. 

XPeng is also expected to deliver several major announcements when it holds its technology day this week. For example, it will likely announce a new product or a new powertrain as it seeks to beat other top competitors like Nio and BYD. 

The company has also boosted its Advanced Driver Assistance Systems (ADAS) technology. It can now provide self-driving features in public roads in China and other markets.

JPMorgan believes that XPeng will benefit as more people in China embrace electric vehicles, which will get to 60% of total vehicle sales by 2030. 

Chinese EV companies have been investing in technology in the past few years. For example, BYD has come up with a hybrid vehicle with a 2,000-mile range. XPeng has also mastered the range battle, with its G9 vehicle having a 436 range.

XPEV’s business is doing well

A key concern for XPeng and other electric vehicles is that their revenue and unit growth will continue slowing in the coming years. Besides, competition in the industry has risen, with China having over 100 companies. 

However, the reality is that XPeng and other Chinese EV companies are seeing strong demand. For example, XPeng delivered 21,352 vehicles in September, a 40% increase from the same period in 2023. XPENG MONA M03, which started deliveries in September, sold 10,000 units during the month. 

Its total deliveries in the second quarter rose by 16% to 46,533. The JPMorgan analyst expects that its fourth-quarter deliveries will rise by 77%, helped by the MONA brand.

Most importantly, XPeng has expanded its business in other countries, especially in Europe. It recently introduced the G9, G6, and P7 models in Spain and Portugal. While Europe has announced EV tariffs, its manufacturing edge means that its vehicles will be affordable to many Europeans.

The most recent results showed that XPeng’s delivered 30,207 vehicles in the second quarter, a 30% increase from the same period last year. This increase happened as the number of its locations jumped to 611 stores. Its self-operated charging locations grew to 1,298, a trend that will continue in the near term.

XPeng also grew its margins during the quarter, with the gross margin rising to 14% from minus 3.9% in 2023. 

Most importantly, despite its huge investments, the company continued to narrow its losses. Its net loss came in at 1.28 billion in the last quarter, down from 2.8 billion in Q2’23.

XPeng also has a strong balance sheet. It ended the last quarter with $1.9 billion in cash and short-term investments. In addition to this, it has $474 million in restricted cash and $1.5 billion in short-term deposits, and $73 million in restricted short-term deposits. 

Altogether, XPeng has $6.15 billion in current assets against $4.1 billion in current liabilities, meaning that it has over $2 billion in working capital. As such, the company will likely not raise additional capital in the near term. Remember, it also received $700 million from Volkswagen, which now owns about 5% of its business. 

Analysts believe that XPeng will continue to do well in the near term. The third-quarter revenue is expected to be $1.37 billion, 15.5% higher than last year. Also, the annual revenue of $5.7 billion will be a 335 increase. It will be followed by $9 billion in 2023. 

Also, the company is expected to continue reducing its losses. The loss per share is expected to be 77 cents followed by 43 cents next year.

XPeng stock price analysis

XPEV chart by TradingView

The daily chart shows that the XPEV share price bottomed at $6.57 in April and August. A double-bottom pattern is one of the most bullish signs in the market. It has also moved above the key resistance point at $10.50, the double-bottom’s neckline.

The stock has also formed a golden cross pattern as the 200-day and 50-day Exponential Moving Averages (EMA). In most periods, this is one of the most bullish signs in the market. 

Therefore, the stock will likely rise as bulls target the 50% retracement point at $15, which is about 40% jump from the current level.

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