XPeng stock price dipped after earnings: here’s why it’s a buy

XPeng stock price crashed by over 10% on Monday and officially moved into a bear market after crashing by over 20% from its highest level this year. This crash happened after the company published strong financial results, but warned about its growth amid soaring competition in China. XPEV was trading at $22, with its market capitalization being over $21 billion.

Xpeng reported strong financial results

Xpeng, one of the biggest players in the electric vehicle industry, published strong financial results on Monday. These numbers revealed that the company delivered 116,007 cars in the third quarter, up sharply from 46,533 in the same period last year. It had sold 30,207 vehicles in the second quarter of the year.

These numbers confirmed that Xpeng is one of the fastest-growing electric vehicle companies in the world. Indeed, a recent report showed that BYD’s sales lost momentum in the second quarter, continuing a trend that has been going on in months.

Xpeng’s revenue rose by 101% in the third quarter to RMB 20.38 billion, which is equivalent to about $2.86 billion. In contrast, Tesla’s revenue rose by 12% to $28 billion, helped by increased purchases in the US ahead of the tax credit expiry.

On the other hand, BYD, the biggest company in China, declined by 3% to RMB 194.9 billion or $27 billion.

XPeng’s gross margin continued rising, moving from 15.3% in Q3’24 to 20%, a sign that the company is making more money per vehicle sold than it did a few years ago.

At the same time, the company’s net loss improved to RMB 38 billion or $0.05, meaning that its profitability is nearing.

Therefore, the Xpeng stock price crashed as investors reacted to its guidance, which was much lower than what analysts were expecting. It expects to make between 21.5 billion yuan or $3.03 billion and 23 billion yuan. Analysts were expecting the company to make about 26 billion.

The company’s reduced guidance was due to the ongoing competition in the country. This competition is coming from companies like Nio, BYD, Xiaomi, and Zeekr. 

Xpeng has potential catalysts ahead. For example, it plans to launch its flying cars in 2026, a move that may lead to more growth over time. In its recent AI Day, the company unveiled its plan to grow its robotaxi and humanoid robot. In a statement, the CEO said:

“Centered around physical AI applications, we are developing a comprehensive portfolio of technologies and products, alongside a thriving business ecosystem, thereby creating greater value for customers and shareholders worldwide.”

Xpeng stock price technical analysis

The daily timeframe chart shows that the XPEV stock price has crashed in the past few months. It has plunged from a high of $28.3 earlier this month to the current $22.45. 

Xpeng stock price has remained above the 50-day and 100-day Exponential Moving Averages (EMA). It also remained above the lower side of the ascending channel. 

XPEV share price remained above the Strong, Pivot, Reverse point of the Murrey Math Lines tool. Therefore, the stock will likely have a strong rebound, potentially to the Major S&R pivot point at $25. 

On the flip side, a move below the lower side of the channel will point to more downside, potentially to the ultimate support at $18.75. 

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