Xpeng (XPEV) Stock Surges: What's Driving the Rally?

Xpeng (XPEV) stock is surging today, up more than 5% in early afternoon trading, as investors cheer the company's recent performance and bullish outlook. The Chinese electric vehicle (EV) manufacturer has been on a roll lately, with a strong September for vehicle deliveries and positive commentary from analysts and company executives. Let's dive into the factors driving XPEV's stock rally.



1. Impressive September Deliveries: XPeng set a new monthly record for vehicle deliveries in September 2024, with 21,352 units sold, a 39% year-over-year increase. This impressive performance was driven by the successful launch of new models, particularly the XPeng MONA M03, which exceeded 10,000 deliveries in its first month. This strong sales momentum has boosted investor confidence in the company's growth prospects.
2. Analyst Bullishness: Citigroup analysts recently boosted their price target on XPeng, citing increasing sales volumes on the horizon. Citi expects sales volumes to nearly double by 2026, to over 400,000 units, driven by interest in the upcoming P7 sedan and Mona M03, as well as the planned lineup of Extended Range Electric Vehicles (EREVs) in 2025. This bullish outlook from analysts has contributed to the stock's recent rally.
3. Positive Company Commentary: XPeng's President, Brian Gu, recently commented that the company expects a big rebound in sales during the second half of the year, driven by the G6 pure electric crossover. He mentioned that the company has received a "significant" number of orders for this model, further bolstering investor confidence in the company's growth prospects.
4. Chinese Government Stimulus: The Chinese government's economic stimulus measures, aimed at supporting the property market and providing financial aid to residents, have boosted investor confidence in Chinese stocks. This has contributed to the overall rise in Chinese stocks, including XPEV, as investors anticipate stronger economic growth and increased consumer spending on EVs.
5. Valuation and Peer Comparison: Despite the recent surge, XPEV stock is still trading at a premium to its peers in terms of forward P/S. However, it is not as expensive as Tesla (TSLA), which trades at a forward P/S of 8.62x. This relative valuation advantage, combined with the company's strong fundamentals and growth prospects, has made XPEV an attractive investment option for many investors.



In conclusion, Xpeng (XPEV) stock is rallying today on the back of strong September deliveries, positive analyst commentary, and bullish company outlook. The Chinese government's economic stimulus measures and the company's attractive valuation relative to its peers have also contributed to the stock's recent surge. As the EV market continues to grow and Xpeng executes on its expansion plans, investors may want to keep a close eye on this dynamic Chinese EV manufacturer.