After its staggering 2023 performance, Chinese electric vehicle (EV) maker Xpeng Motors (XPEV) hit a rough patch, leading to a significant decline in its stock value. In the current year, the shares have continued to slide, signaling a concerning trend in the market. Despite this downturn, Xpeng Motors has achieved several significant milestones.
The Milestones of 2023
Throughout 2023, Xpeng Motors made significant strides, including the introduction of its new low-cost SEPA 2.0 platform and a strategic partnership with Volkswagen (VWAGY) to co-develop vehicles for the Chinese market. The company also cemented its position by launching the G6 SUV, which garnered substantial acclaim and achieved record-high deliveries.
The expansion of its Advanced Driver Assistance System (ADAS) to over 250 cities ahead of schedule showcased Xpeng Motors’ commitment to technological innovation and reinforced its position as a frontrunner in the EV space. Despite these achievements, the market has not been conducive to XPEV’s positive growth trajectory, reflected in its undervalued stock price.
The Decline in Stock Value
Xpeng Motors’ stock plummeted largely due to the downturn in Chinese stocks, influenced by the broader economic slowdown and the tech crackdown in China. Reports of Alibaba selling its stake in XPEV further exacerbated the challenges faced by the EV manufacturer.
The Crucial 2024 for Xpeng Motors
With the company poised to debut its “MONA” brand and a focus on scaling up deliveries while enhancing margins, 2024 holds immense significance for Xpeng Motors. The need to transition from announcements to execution is paramount, as reflected in its impending challenges to meet market expectations and compete with other Chinese automakers.
Li Auto (LI), one of Xpeng Motors’ counterparts, has witnessed considerable success, accentuating the urgency for Xpeng Motors to elevate its delivery numbers significantly. The company’s commitment to boosting its margins and achieving positive gross margins in 2024 signifies its determination to address the bottom-line concerns.
Forecast and Implications
Analysts have bestowed Xpeng Motors with a “Moderate Buy” consensus rating and set a mean target price of $18.02, hinting at substantial upward potential. Notably, the Street-high target price of $25.40 indicates the possibility of the stock doubling from its current levels.
In the midst of the challenges posed by the Chinese economic slowdown and real estate sector concerns, Xpeng Motors remains an attractive investment option, offering an appealing risk-reward proposition.