Xpeng stock price found a strong support: rebound could be epic

on Jul 9, 2024
  • Xpeng share price has found a strong support at $6.34.
  • The company’s vehicle delivery growth trend has continued.
  • It has also continued to expand its vehicle margins despite cutting prices.

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Xpeng (NYSE: XPEV) stock price has collapsed in the past few years. It has retreated to a low of $7.4, down by over 68% from its highest point in 2023. This drop has brought its market cap from over $54 billion in 2021 to over $7.4 billion. 

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Xpeng concerns remain

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Xpeng is one of the leading Chinese electric vehicle companies. Like Nio and Li Auto, it is facing major headwinds as the  EV industry has shown signs of cooling. Competition is also rising as companies like BYD, Tesla, Huawei, and almost 100 more seek to gain market share in the country.

The company is also facing more headwinds in the international market, where key governments have imposed severe tariffs to protect their domestic markets.

Still, recent numbers show that the company’s business was doing modestly well as it continued to expand its margins. 

The most recent numbers showed that Xpeng delivered 10,668 vehicles in June, a 24% increase from the same month in 2023. It was also a 5% increase from the vehicles it delivered in the previous month.

It delivered 52,028 vehicles in the first half of the year, a 26% increase from the same period in 2023. This growth happened as the company boosted the number of its stores in China to 574 and boosted its self-operated charging infrastructure. 

The company has also boosted its margins even after it slashed prices in a bid to win market share. Its gross margin for the quarter was 12.9%, higher than the 1.7% it made in the first quarter. 

Xpeng has also continued to narrow its losses. It generated a net loss of RMB 1.37 billion, down from RMB 2.3 billion. These results show that the company is doing well in a difficult market environment. In a statement, the CEO said:

“Despite fierce market competition, the Company’s gross profit margin saw a substantial increase to 12.9% in the first quarter of 2024. This signifies that Xpeng, based on its smart EV business, has developed a unique approach to lift its profitability and international market potential by providing smart technologies.”

Positioned for growth

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Xpeng still faces many challenges ahead. The biggest issue is that there are signs that the Chinese economy is recovering at a slow pace, which will affect its overall revenue growth in the long term.

Still, analysts are optimistic that its revenue growth will remain in the double digit zone. The average estimate is that Xpeng’s revenue rose by 63.50% in the last quarter to $1.13 billion. For the year, it expects that the revenue will rise by 40% to $6.05 billion followed by $9.6 billion in 2025.

Most analysts have a neutral outlook of the Xpeng stock price. In a recent note, Citigroup upgraded its view from sell to neutral while Morgan Stanley left its view to overweight. 

Xpeng stock price forecast

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Xpeng stock

XPEV chart by TradingView

Turning to the weekly chart, we see that the XPEV share price has moved sideways in the past few months. It has found substantial support at $6.76, where it has failed to move below since January 2023. 

There are signs that it has formed a double-bottom chart pattern whose neckline is at $23.22. In most cases, a double-bottom is one of the most bullish signs in the market.

The stock has constantly remained below the 50-week moving average, which is a bearish sign Therefore, with EV companies like Zapp and Tesla rising, there is a likelihood that the Xpeng stock will also bounce back. 

If this happens, the stock could jump to the key resistance point at $10. However, a drop below the key support level at $6.76 will point to more downside. 

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