XPEV - XPeng: Improving Margin Trend

2024-05-27 04:06:48 ET

Summary

• XPeng's shares have declined sharply YTD due to headwinds in the sector, including seasonal effects.
• Delivery growth is slowing due to waning EV demand and the inclusion of Chinese New Year holidays in Q1.
• XPeng's margin picture continued to improve, but shares are still relatively expensive compared to other Chinese EV start-ups.

Shares of XPeng ( XPEV ) have revalued sharply lower this year, although shares of the EV maker soared 26% after the company reported Q1'24 results last week. XPeng’s first quarter delivery growth continued to slow due to headwinds in the sector that include waning EV demand as well as growing price competition among an increasing number of players in the industry that are vying for market share. While XPeng’s delivery accomplishments were not the best, the electric vehicle maker did see an improvement in its margin picture... which was a positive take-away from the earnings report. With shares still being expensive relative to other Chinese EV start-ups, I believe the best rating for XPeng remains a hold!...

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