XPeng stock price remained under pressure even after the company published strong delivery data. XPEV stock was trading at $18.25 on Tuesday, down by over 32% from its year-to-date high.
This article explores what to expect in the coming weeks as it has formed a highly bullish cup-and-handle pattern.
XPeng business is doing well
XPeng, a top player in the electric vehicle industry, has continued doing well this year as deliveries jump. Data released this week showed that its deliveries jumped by 224% YoY to 34,611, making it the eighth consecutive month that deliveries crossed the 30,000 level.
XPeng’s quarterly deliveries jumped to 103,181 vehicles in the second quarter and over 197,189 vehicles in the year’s first half.
These are notable numbers considering that the electric vehicle sector is facing substantial competition. Most of this competition is coming from companies like BYD, Xiaomi, and Li Auto.
This growth is expected to continue in the coming weeks as the company expands its international presence. It recently launched its XPENG X9 vehicle in Indonesia, bringing its geographical locations to 40 countries.
Revenue growth to accelerate
The most recent results demonstrate the company’s rapid growth. Its results showed that its deliveries stood at 94,008 in the first quarter of the year, representing a 330% annual increase.
XPeng’s sales growth happened as the number of sales network jumped to 690 stores. As a result, its total revenue rose to RMB 15.8 billion or $2.18 billion in the first quarter of the year. Its revenue growth stood at 141% on an annual basis.
The company’s gross margins rose to 15.6%, while its vehicle margin rose to 10.5%. These are encouraging numbers for a company whose business is growing rapidly.
Most importantly, XPeng has narrowed its losses and is nearing its breakeven. Its net loss stood at RMB0.66 billion in the quarter, down from RMB1.37 billion.
Analysts expect the company’s revenue and profitability growth will continue. The average estimate is that its second-quarter revenue will come in at RMB 18.62 billion, up by 129.5% on an annual basis.
Its third-quarter revenue is expected to come in at RMB 20.8 billion, up by 106%. This, in turn, will bring its annual revenue to RMB 82.36 billion, up by 101% YoY.
The company’s revenue is expected to increase to RMB 112 billion next year. Its earnings per share will move from RMB 5.87 last year to RMB 1.9 this year. It will then make a profit of RMB 2.2 next year.
XPeng stock price analysis
The daily chart shows that the XPeng share price has remained in a tight range in the past few weeks. On the positive side, this pattern has formed a cup-and-handle pattern, a popular bullish pattern.
The upper side of this pattern is at $23.47, while its lower side is at $6.60. This gives it a depth of about 72.40%. The stock is now forming the handle section of the pattern.
Measuring the same distance from the upper side points to more gains, potentially to the resistance at $40.53. This price target is about 121% above the current level, and is in line with the last XPEV forecast. A drop below the support at $15 will invalidate the bullish view.
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