Will Xpeng (XPEV) Plan For Cheaper Brand Face Same Fate As Those Who Have Attempt?
$XPeng Inc.(XPEV)$ is expected to show a rise in quarterly revenue when it reports results on 19 March 2024 for the period ending 31 December 2023.
XPeng is expected to post a 160.6% increase in revenue to CNY13.394 billion compared to CNY5.14 billion a year ago. Xpeng’s guidance on 15 Nov 2023, for the period ended 31 Dec 2023 was for revenue between CNY12.70 billion and CNY13.60 billion. (Majority is on Total Revenue Basis.)
The estimate for earnings per share is at CNY3.27 per share. Xpeng shares rise in the Hong Kong market after they announced that they are seeking a larger mass market share with the launch of its affordable EV brand. This move is in response to the ongoing price war in China’s EV market and part of the company’s efforts to grab some market share from industry giant $BYD Co., Ltd.(BYDDF)$ .
They are planning to launch a cheaper brand with price of between 100,000 yuan and 150,000 yuan ($14,000-$21,000) amid fierce China price competition in the EV industry.
Technical is showing Xpeng is trying to bounce back from the bottom it have been in. XPeng have been trading close to the 50-day MA period.
The buying strength looks promising over the last week, as we could see it rising steadily. I would watch how Xpeng would trade today (18 March 2024) in the US market.
Xpeng (XPEV) Last Reported Earnings
XPEV last reported earnings on 15 Nov 2023 before the market opened (BMO). XPEV shares gained +2.3% the day following the earnings announcement to close at 17.39. Following its earnings release, 124 days ago, XPEV stock has drifted -44.6% lower.
From the time it announced earnings, XPEV traded in a range between 7.80 and 18.74. The last price (9.64) is closer to the lower end of range.
Estimated implied straddle for upcoming earnings is 12.3%. If we look back at how Xpeng have moved with more than 10% implied straddle, we could have a surprise Gap Up after its earnings result tomorrow (19 Mar 2024)
Xpeng (XPEV) Post Earnings Movement
The options market overestimated XPEV stocks earnings move 83% of the time in the last 12 quarters. The predicted move after earnings announcement was ±10.4% on average vs an average of the actual earnings moves of 8.3% (in absolute terms).
This suggest an option valuation which is overvalued, price volatility could be expected, but if Xpeng could provide a better-than-expected revenue, though we could still see Xpeng in loss.
Outlook is more important for Chinese EVs now.
Summary
I would be looking out at how Xpeng would be navigating the fierce competition in Chinese EVs market, their cars have been quite well on the road. So what is next for them in terms of number?
I would think cheaper cars is a good idea, but is it sustainable? Other EV makers have also toyed with this idea, I guess it come down to the execution, how well it would give the numbers investors need.
Appreciate if you could share your thoughts in the comment section whether you think Xpeng could turn the numbers by launching cheaper brand? How much can this improve the numbers?
@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.
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