Tesla Vs. XPeng Stock: The Better Buy For Long-Term Investors

seekingalpha2021-05-14

SummaryXPEV and TSLA are two ambitious EV players that seek to grow massively in China and that want to become autonomous vehicle leaders.There are major differences between the two companies as well,...

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Comments

Jj1985
2021-05-23
Jj1985
Xpeng has bigger distribution channels?
4M65
2021-05-19
4M65
Bought both. ?
Loolala
2021-05-19
Loolala
XPeng would probably only do well in China.
kytan87
2021-05-18
kytan87
[微笑]
kaka822
2021-05-18
kaka822
Both keep dropping
joshuachin
2021-05-18
joshuachin
Xpeng is an early-stage Tesla

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XPeng Stock: The Better Buy For Long-Term Investors\n</h2>\n\n<h4 class=\"meta\">\n\n\n2021-05-14 15:10 GMT+8&nbsp;&nbsp;&nbsp;<a href=https://seekingalpha.com/article/4428202-tesla-vs-xpeng-stock-better-buy><strong>seekingalpha</strong></a>\n\n\n</h4>\n\n</header>\n<article>\n<div>\n<p>SummaryXPEV and TSLA are two ambitious EV players that seek to grow massively in China and that want to become autonomous vehicle leaders.There are major differences between the two companies as well,...</p>\n\n<a href=\"https://seekingalpha.com/article/4428202-tesla-vs-xpeng-stock-better-buy\">Source Link</a>\n\n</div>\n\n\n</article>\n</div>\n</body>\n</html>\n","isBrief":false,"type":0,"news_type":1,"symbol":"XPEV","symbol_name":"小鹏汽车","start_time":0,"source_url":"https://seekingalpha.com/article/4428202-tesla-vs-xpeng-stock-better-buy","article_id":"1192747075","we_media_id":null,"thumbnails":[],"rights":null,"url":"https://stock-news.laohu8.com/highlight/detail?id=1192747075","pubTimestamp":1620976200,"sourceInfo":{"source_id":"seekingalpha","name":"Seeking Alpha"},"weMediaInfo":null,"summary":"SummaryXPEV and TSLA are two ambitious EV players that seek to grow massively in China and that want","collect":0,"end_time":0,"defaultTopTitle":"seekingalpha.com","property":[],"viewcount":null,"language":"en","relate_stocks":{"XPEV":"小鹏汽车","TSLA":"特斯拉"},"translate_title":"特斯拉VS。XPeng股票：长线投资者最好买入","themeId":null,"isJumpTheme":false,"ttsUrl":null,"symbols_score_info":{"TSLA":0.9,"XPEV":0.9},"content_text":"SummaryXPEV and TSLA are two ambitious EV players that seek to grow massively in China and that want to become autonomous vehicle leaders.There are major differences between the two companies as well, e.g. when it comes to profitability, growth, and valuation.We will showcase which company is the better choice for different types of investors.Article ThesisEVs have been a hot sector in 2020, but in 2021, the share prices of many EV stocks have come down, at least to some degree. This holds true for Tesla (TSLA) and XPeng (XPEV), two EV players that both seek to grow massively in China this year. The similarities don't end there, as both companies are also ambitious when it comes to integrating tech with their EVs, such as developing autonomous driving capabilities. In this article, we will take a closer look at the two and see which company looks like a better pick right here.Similarities And DifferencesBoth Tesla, Inc. and XPeng, Inc. have gone all the way towards EVs, instead of opting for a middle-of-the-road approach like Li Auto (LI) with its hybrid cars and many legacy car companies that offer a diversified portfolio of EVs, hybrids, and ICE cars.On one hand, this BEV-only approach limits the addressable market for both Tesla and Xiaopeng Motors, at least for now, as many consumers are not willing to buy a BEV yet. On the other hand, due to being focused on this segment of the vast automobile industry, they can gather the most expertise in this high-growth field that will likely eventually dominate the entire auto industry. Their BEV-only approach could thus pay off in the long run, as this approach may lead to advantages over companies that use a more nuanced approach when it comes to shifting towards the EV megatrend.Both companies are trying to move towards the intersection between automobile companies and tech companies, through increased focus on \"techy\" offerings such as smart cars, interconnectivity, and autonomous driving.Unlike Tesla, however, XPeng is not overly ambitious in becoming an integrated energy company, which differentiates the two. Tesla has on top of its car business and tech aspirations, also energy storage and a solar panel business -both aren't profitable, however. Tesla also is a clearly larger company for now, as it currently leads the global EV market, with sales being expected at around 800,000 cars this year, which is significantly more than the expected sales for XPeng and all other EV pureplays, including NIO (NIO). The approach when it comes to the two companies' respective model lineups differs as well. Tesla went for the top end of the market at first, introducing its high-priced model S, before rolling out an SUV and a more mass-market model later on. XPeng, on the other hand, introduced an SUV first, which seems like an approach that has the potential to gain higher market share in a short period of time, as SUVs are a larger market segment compared to luxury sedans. It is also noteworthy that XPeng has introduced a total of 3 models in just 3 years (G3, P7, P5), whereas it took Tesla significantly longer to roll out the X and the 3 following the launch of its Model S in 2012 (not counting the Roadster, which was sold in very low volumes only).XPEV And TSLA PerformanceLooking at the stock performance of Tesla and XPeng, we see that both have benefited massively from a massive EV investment boom in 2020. Ultra-loose monetary policy, coupled with government subsidies and encouraging market growth, has resulted in exploding share prices for many EV companies last year, including these two:Between August 2020, when XPeng went public, and the beginning of the current year, the two companies have seen their shares rise by 75% and 102%, respectively, while the broader EV sector also delivered a very compelling 69% return. In 2021, however, valuations have declined to some extent, as the market overall became warier of highly-valued growth names.Year-to-date, Tesla's shares are down by 12%, whereas XPeng has seen its shares lose more than 40% of their value. The same happened to many other EV stocks, especially those that are still relatively young. NIO, LUCID (CCIV), Fisker (FSR), Lordstown Motors (RIDE), and many more are also down quite a lot from their all-time highs from a couple of months ago, in some cases losing well above 50%.We can thus say that buying into Tesla or XPeng during or prior to the boom in 2020 has worked very well for investors, whereas those that bought at the highs may be steeply in the red by now, as the whole sector has lost quite a bit of steam in recent months. Due to the very high valuations that some investors paid for EV stocks when they were at their highs, the recent underperformance versus broad equity markets is not a large surprise.Can XPeng Compete With TeslaThe EV industry is a high-growth industry for sure, and thus we should consider the growth outlook for XPEV and TSLA, of course. Tesla is a significantly larger company than XPeng, which is why its revenue growth, on a relative basis, will likely be lower compared to XPeng.This statement is based on both the guidance from both companies' management teams - Tesla is forecasting ~50% growth a year, while XPeng is more aggressive - and on the current consensus estimates by the analyst community:The current analyst consensus sees Tesla grow its revenues to $49 billion this year, with a growth rate of 37% and 27% forecast for 2022 and 2023, based on the consensus revenue estimates for these years. Looking at XPeng, we see that the consensus revenueestimatefor this year stands at $2.15 billion, with $4.2 billion being forecasted for next year. This equates to a revenue growth rate of 95% for 2022. Based on the revenue of$900 millionthat XPeng generated last year, the current consensus estimate sees XPeng grow by almost 140% this year. XPeng has grown its deliveries by more than 300% on a year-over-year basis during the first quarter, thus it looks like the company is on track to achieve a revenue growth rate well north of 100% this year. Tesla, on the other hand, will grow by about 55% this year if they can hit the $49 billion sales estimate for the current year.All in all, we can thus say that the forecasted growth rate at XPeng is significantly higher compared to Tesla, which isn't a very large surprise. XPeng is smaller and can thus deliver a high relative growth rate more easily, and it will see a lot of international growth in coming years as it rolls out its models in additional markets. Tesla, on the other hand, as a more mature company, is already active in more markets and will thus see fewer tailwinds from geographic growth. China's politics, which seems to favor domestic manufacturers over foreign companies such as Tesla, also should lead to tailwinds for XPeng in China, which is the largest automobile market in the world. It should be noted, however, that Tesla will most likely still deliver growth that is way higher than what one can expect from legacy auto companies in coming years, even though it won't deliver the growth rates that can be expected from XPeng, NIO, and other EV pureplays.Due to its larger size, Tesla is able to generate more attractive margins than XPeng for now. XPeng will likely not be profitable this year or next year, whereas Tesla has managed to generate net profits in recent quarters and will likely do the same in coming years, although, for now, profits are dependent on regulatory credit sales. The better profitability at Tesla allows the company to generate better cash flows, which naturally is beneficial for the company's ability to finance future growth investments organically. XPeng, due to not being profitable yet, might have to use either debt financing or issue more shares to finance future growth investments, although its$5+ billion cash cushiongives it a lot of near-term flexibility.Looking at the valuations of the two companies, we can say that comparing them on an earnings multiple basis isn't a great idea. XPeng isn't profitable yet, and analysts' earnings estimates for Tesla have been ratherunreliable in the past. Instead, we can look at the revenue multiples these two companies trade at right now. Tesla, being valued at $600 billion, trades at 9 times next year's revenue. That is, compared to how legacy auto companies are valued, extremely expensive. On the other hand, we should note that Tesla has gotten a little less expensive over the last couple of months, as shares used to trade at even higher multiples a while ago. XPeng, on the other hand, with a market capitalization of $20 billion, is currently valued at 4.8 times next year's revenue, which is roughly half the valuation Tesla trades at. Some may argue that Tesla deserves a higher valuation due to its larger size and established profitability, but one can also take the opposite position and argue that XPeng should trade at a higher valuation, due to a significantly higher growth rate.When looking at how these competitors do in different fields, we should also take a look at their autonomous driving ambitions. Tesla is, according to some, very well positioned when it comes to developing a self-driving car. Its current offering, however, is only capable ofdelivering Level II autonomy. Not too much is known about XPeng's autonomous driving program, but the company has recentlyset several recordsfor autonomous driving performance in China, which indicates that the company belongs to the leaders in this space as well. XPeng is significantly smaller than Tesla for now, but it looks like XPeng is very capable of competing with Tesla in a range of metrics, including delivering growth (where it actually easily outperforms Tesla for now), and in autonomous driving capabilities.Tesla Vs XPeng: The Better BuyThe two companies are attractive for different types of investors. Those that favor the largest fish in the tank and that do not mind the very high valuation will likely favor Tesla, which is also more diversified internationally. Those that seek a higher-growth company at a lower valuation will opt for XPeng. Additionally, investors may want to factor in the exposure to the Chinese market - those that want a play for Chinese consumption growth will like XPeng, those that worry about regulation in the country may opt for US-based Tesla. It should be noted that both companies are looking relatively expensive on a price to sales basis compared to other auto companies, but I personally would see XPeng as the more attractive choice right here. This depends, to a large degree, on the things you value in an investment, however. Those that are less focused on valuation, or that like Elon Musk's ambitions in additional industries may choose differently. Ultimately, your investment goals and investment approach decide which of the two companies may be a better choice for your portfolio, while it is, of course, also possible to own both - or neither.","kind":null,"is_publish_news":true,"is_publish_highlight":false,"is_publish_live":false,"is_publish_wemedia":null,"editions":null,"column":"","sentiment":"0","news_tag":"","news_rank":0,"symbols":[],"gpt_button":1},"commentList":[{"id":133556067,"gmtCreate":1621773783559,"gmtModify":1704362280863,"author":{"id":"3555192598177225","authorId":"3555192598177225","name":"Jj1985","avatar":"https://static.tigerbbs.com/d52a052d654dfb301401489286662068","vip":1,"crmLevel":6,"crmLevelSwitch":0,"authorIdStr":"3555192598177225","idStr":"3555192598177225"},"htmlText":"Xpeng has bigger distribution channels?&nbsp;","listText":"Xpeng has bigger distribution channels?&nbsp;","text":"Xpeng has bigger distribution channels?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/133556067","repostId":1192747075,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":197130597,"gmtCreate":1621432692619,"gmtModify":1704357561263,"author":{"id":"3581820860708816","authorId":"3581820860708816","name":"4M65","avatar":"https://static.itradeup.com/news/7fc7f4421f14ba7490b1b45f2dd73990","vip":1,"hat":"https://static.tigerbbs.com/4c5ceab71416b120bab4604c0754b52a","crmLevel":4,"crmLevelSwitch":1,"authorIdStr":"3581820860708816","idStr":"3581820860708816"},"htmlText":"Bought both. ?","listText":"Bought both. ?","text":"Bought both. ?","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/197130597","repostId":1192747075,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":197377562,"gmtCreate":1621431638456,"gmtModify":1704357532463,"author":{"id":"3578052867736429","authorId":"3578052867736429","name":"Loolala","avatar":"https://static.tigerbbs.com/1dcdb711f767250ec9d3e97994dd0b90","vip":1,"crmLevel":3,"crmLevelSwitch":0,"authorIdStr":"3578052867736429","idStr":"3578052867736429"},"htmlText":"XPeng would probably only do well in China.","listText":"XPeng would probably only do well in China.","text":"XPeng would probably only do well in China.","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/197377562","repostId":1192747075,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":194918406,"gmtCreate":1621333316305,"gmtModify":1704355935591,"author":{"id":"3562462075054241","authorId":"3562462075054241","name":"kytan87","avatar":"https://static.tigerbbs.com/704e025760f35ac07975581c40e7bfce","vip":1,"hat":"https://static.tigerbbs.com/b073a07f77dbe6b3bec6b12311fde6bd","crmLevel":6,"crmLevelSwitch":1,"authorIdStr":"3562462075054241","idStr":"3562462075054241"},"htmlText":"[微笑]&nbsp;","listText":"[微笑]&nbsp;","text":"[微笑]","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":0,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/194918406","repostId":1192747075,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"CN"},{"id":195863049,"gmtCreate":1621273780081,"gmtModify":1704355007394,"author":{"id":"3570966519802740","authorId":"3570966519802740","name":"kaka822","avatar":"https://static.tigerbbs.com/729040ff5fc082505f280741e7848165","vip":1,"crmLevel":3,"crmLevelSwitch":0,"authorIdStr":"3570966519802740","idStr":"3570966519802740"},"htmlText":"Both keep dropping","listText":"Both keep dropping","text":"Both keep dropping","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":2,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/195863049","repostId":1192747075,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"},{"id":195897513,"gmtCreate":1621268235332,"gmtModify":1704354962463,"author":{"id":"3575284407051997","authorId":"3575284407051997","name":"joshuachin","avatar":"https://static.laohu8.com/default-avatar.jpg","vip":1,"crmLevel":2,"crmLevelSwitch":0,"authorIdStr":"3575284407051997","idStr":"3575284407051997"},"htmlText":"Xpeng is an early-stage Tesla","listText":"Xpeng is an early-stage Tesla","text":"Xpeng is an early-stage Tesla","images":[],"top":1,"highlighted":1,"essential":1,"paper":1,"likeSize":1,"commentSize":0,"repostSize":0,"link":"https://ttm.financial/post/195897513","repostId":1192747075,"repostType":2,"isVote":1,"likeStatus":false,"favoriteStatus":false,"reportStatus":false,"tweetType":1,"langContent":"EN"}],"isCommentEnd":false,"newsSizeData":{"likeSize":28,"commentSize":10,"repostSize":0,"favoriteSize":5,"likeStatus":false,"favoriteStatus":false},"APP":{"userAgent":"Mozilla/5.0 AppleWebKit/537.36 (KHTML, like Gecko; compatible; ClaudeBot/1.0; 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