Stock Pick of the Week
THIS WEEK’S PICK: XPeng
About: XPeng Motors, commonly known as XPeng, is a Chinese electric vehicle manufacturer. The company is headquartered in Guangzhou, with offices in Mountain View, California in the United States and is publicly traded on the New York Stock Exchange.
Steven Schultz - Chief Executive Officer - Momentum Securities, shares his insights.
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Transcription:
The fight for electric car supremacy is firmly on, and there are no shortage or competitors looking to challenge Tesla and its acentric founder and CEO Elon Musk, who has obviously taken a very public early lead in an electrifying personal transport.
But the truth is, the transitioning global transport towards sustainability isn't necessarily a winner takes all event but rather an opportunity for new vehicle manufacturers to compete meaningfully in what has over the past decade proven to be an industry with a very few formidable and established competitors.
Our Stock Pick this week is the New York listed and Chinese electric car manufacturer XPeng. Founded in 2014, XPeng now produces and sells three electric vehicles primarily in its countries of origin where it boast an impressive charging network similar to what one would find in the US in a form of Tesla's supercharging stations.
After having achieved an important milestone and delivering over 100 000 vehicles per second-consecutive month in October 2021, that's representing a 233% year on year increase in sales. XPeng is now focusing its ambitions abroad with intention of generating no less than 50% of its sales outside of China.
In contrast to the rapid increase in sales, XPeng's earnings have recently come under short term pressure. This is partly due to the world documented global ship shortage as well as expansion into international markets such as Norway, Sweden, Denmark and the Netherlands. Fortunately, the global ship shortage does appear to now be easing and XPeng's European strategy is poised to undercut its established competitor namely Tesla.
XPeng's based model is expected to cost around USD23 000, that's undercutting the price of the Tesla model 3 by a not so trivial 35%.
XPeng is up roughly 21% so far in 2021 and is certainly not a share for the risk of the investor as it's proven to be exceptionally volatile over the past few months. Despite the volatility and the lack of an established track record, XPeng perhaps warns consideration as a long term buy and hold, provided that it represents a small allocation in one’s international growth portfolio.
