Xpeng CEO loads up on XPEV: here’s why you shouldn’t

Written by

Edited by

Written on Aug 26, 2024

Reading time 3 minutes

Xpeng CEO recently bought over $13 million worth of XPEV.
But a Citi analyst does not see meaningful upside in Xpeng.
Xpeng stock has been cut in half since the start of 2024.

Xpeng Inc (NYSE: XPEV) has been cut in half this year but He Xiaopeng – its chief executive remains bullish as ever on the EV stock.

Xiaopeng invested over $13 million in his company’s stock last week. He bought 1 million shares of Xpeng in Hong Kong on top of more than 1.4 million American Depositary Shares of the electric vehicles firm from August 21 to August 23.

Additionally, CEO He Xiaopeng confirmed plans to boost his stake further in XPEV in the months ahead. Xpeng stock is currently trading at $7.0 versus about $64 at the peak of the COVID pandemic.

Why does it matter for Xpeng stock?

Xiaopeng now has an 18.8% stake in Xpeng following these transactions that indicate he sees significant growth potential in the electric vehicles manufacturer.

The move is significant because chief executives have deep insight into their company’s operations and plans.

Investors, therefore, tend to read their stock purchases as a signal of positive developments ahead.

Market typically responds constructively to insiders’ stock investments also because they align the financial interests of the management with those of other shareholders.

Still, Citi analyst Jeff Chung recommends against following CEO He Xiaopeng in his footsteps and investing in Xpeng stock.

He trimmed his price target on XPEV in a recent research note to $7.60 which does not suggest the potential for a meaningful upside from here.

Chung expects the recently launched MONA brand aimed at mass-market buyers to help boost annual sales volume by up to 3% from 2024 to 2026.

Still, he lowered his expected revenue forecast for Xpeng by 5% to 7% as MONA models are expected to dilute the average selling price (ASP).

Citi currently has a neutral rating on XPEV even though it narrowed its loss in the second quarter of 2024.

Strength in service-related income also helped the EV maker report a 60% year-on-year increase in its quarterly revenue last week.

But the investment firm isn’t bullish on Xpeng stock as it continues to lag in terms of deliveries.

The Chinese automaker delivered 11,145 vehicles in July – down sharply from over 20,000 in late 2023.

Moreover, XPEV does not pay a dividend to make it any more attractive either. Our expert Jibran Kundi also recommends keeping on the sidelines in Xpeng shares for now.