XPeng Stock Is Quietly Becoming More Controversial Than Tesla

Dow Jones2022-11-28

Shares of pure-play electric vehicle producers can be controversial on Wall Street. High-growth car stocks can be difficult to value when the traditional auto players trade for less than seven or eight times estimated earnings. Shares of Chinese EV maker XPeng are now one of the most controversial EV stocks, supplanting even Tesla on a measure of Street controversy.

Over the Thanksgiving holiday, Jefferies analyst Johnson Wan downgraded XPeng (ticker: XPEV) shares to Sell from Hold. He reduced his price target more than 75% to $4.20 from $18.60 a share.

XPeng stock is down 1.8% in premarket trading following the new bearish call. The market is weaker, too. S&P 500 and Nasdaq Composite futures are off about 0.9%.

It’s the second XPeng downgrade to Sell in the past few weeks. Citi analyst Jeff Chung doubled-downgraded shares to Sell all the way from Buy back in late October. (Analysts typically go one ratings notch at a time, from Buy to Hold then from Hold to Sell and vice versa.)

On his downgrade, Chung’s target price went to $3.18 a share from $27.87 a share, down about 89%.

Those are two huge price target cuts. It hasn’t all been bad news from the Street though. Recent weakness in XPeng shares prompted UBS analyst Paul Gong to upgrade the stock to Buy from Hold in mid-November. But with XPeng stock down about 85% year to date, Gong cut his target to $13 a share from $34 when he changed his rating.

XPeng didn’t didn’t reply to Barron’s request for comment early on the day.

Wan’s $4.20 price target is now the low mark on the Street. Daiwa analyst Kelvin Lau has the top target among his peers at $43 a share, according to FactSet. The $38.80 spread is almost 550% of Friday’s closing price of $7.07 a share.

That’s an incredibly wide bull-bear spread. The spread for shares of NIO ( NIO ) and Li Auto (LI) is about 210% and 315%, respectively. The bull-bear spread for shares of Tesla (TSLA) is about 275%.

XPeng wasn’t always this controversial for analysts. At the start of the year, the bull-bear spread for XPeng stock was less than 100% of the shares’ roughly $50 price. Back then, the bull-bear spread for Tesla stock was about 125% of its share price.

The range of opinions regarding XPeng is widening. Still, a downgrade from Hold to Sell doesn’t change a stock’s Buy-rating ratio. About 83% of analysts covering XPeng shares rate then buy. The average Buy-rating ratio for a stock in the S&P 500 is about 58%.

With the Wan rating, about 6% of the analysts covering XPeng shares rate them Sell. The average Sell-rating ratio for S&P stocks is less than 10%.

Coming into Monday trading, XPeng stock is down about 86% year to date. NIO and Li shares are off about 68% and 48%, respectively.

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