Guangzhou, China-based electric vehicle company Xpeng Inc. (NYSE: XPEV) recently went public on the NYSE and its IPO has gone pretty well despite tensions between the US and China. . When the company went public, it sold 99.7 million American Depositary Shares ADS for $ 15 each, raising around $ 1.5 billion. Originally, the company planned to sell 85 million shares at a target price of between $ 11 and $ 13.
Going public, this gives Xpeng more access to larger capital,.
which will be needed to compete effectively with companies such as Nio, WM Motor, Li Auto and Tesla.
Currently, Xpeng sells two electric vehicles, including the G3 SUV and the P7 sedan.
Production of the G3 SUV began in November 2018, and as of July 31, Xpeng has delivered 18,741 to its customers. And deliveries of the P7 began in May 2020, which have since recorded more than 1,966 deliveries.
In 2019, Xpeng’s revenue was $ 328.54 million,
of which $ 307.32 million came from the sale of vehicles. And the total cost of sales in 2019 was $ 407.55 million. The operating loss of the company was $ 535.11 million and the loss of net income was $ 522.53 million. Even though the company is operating with a large loss, it is worth considering how long it took Tesla to make a profit. Tesla made its first annual profit in the last 3 months of 2019 after being listed on the stock exchange for 10 years and the company was founded in 2003. Next year Xpeng also plans to launch a new sedan followed by a Bigger SUV. big in 2022.
Some of Xpeng’s investors before the company went public include Jack Ma, Xiaomi and the Qatari sovereign wealth fund. And Xpeng is working with BlackBerry for the operating system to be used in the vehicle’s on-board computer.
Xpeng (XPEV): should I buy it now?
In my opinion, Xpeng went public at the right time. Demand for electric vehicles has increased and China is believed to account for more than 45% of global electric vehicle sales volumes and is already 3.5 times larger than the US market, according to capital.com. And data from IHS Markit indicates an expected compound annual growth rate of electric vehicle sales in China of 29.4% through 2025.
Xpeng will also benefit from the improved economies of scale over battery cost.
For example, the average price of a lithium battery was $ 131 per kWh in 2019. And it is expected to drop by a compound annual rate of 10% over the next 3 years, generating additional profit per unit sold. .
When the company went public on Thursday, August 27, the stock price jumped 40%, from $ 15 to $ 21.22. And then the stock price jumped 7.4% again, from $ 21.22 to $ 22.79 on Friday.
Analysts are waiting for more data such as quarterly results to make recommendations on whether or not to buy the stocks.
Based on what I see, I plan to start buying Xpeng shares this week using a buy and hold method for fractional shares of the company and an average dollar cost strategy. I used a similar approach for Nio and my total earnings for this action were over 24%. I firmly believe that Xpeng has long term potential based on the metrics I see.
Disclosure: I wrote this article personally and have no business relationship with any company that I write for stocks.
I am not a financial advisor and all articles are my opinion. You should do your due diligence and consider speaking with a financial professional before investing.