Xpeng (NYSE:XPEV) is arguably one of the hottest electric vehicle (EV) stocks out there right now. And that’s quite the feat, considering that it competes with Tesla (NASDAQ:TSLA), Nio (NYSE:NIO) and many other surging EV names. However, XPEV stock’s run is something else — just since the end of October, shares are now up from $20 to $65. That’s a jaw-dropping move.
So, what makes Xpeng stand out from the EV herd? For one, the company already has a large operating business. In September, it delivered 3,478 vehicles and 8,578 for the past quarter altogether. That already makes it competitive with Nio in the Chinese market. What’s more, the EV maker is building a second factory and is starting to export vehicles as well. Needless to say, it’s well ahead many of its fellow EV rivals.
Still, the recent excitement in XPEV stock probably isn’t because of those underlying fundamental developments. Rather, traders are reacting to the powerful momentum in EV stocks as well as Xpeng’s recent product announcements.
XPEV Stock and the New P7 Wing
Besides the euphoria in EV stocks generally, the most obvious catalyst for Xpeng’s recent run is its new product announcement at the 2020 Auto Guangzhou show. InvestorPlace contributor William White has all the details.
The quick take is that last Friday, Xpeng rolled out its latest design, the P7 Wing sedan. This new model will cost around $60,000 and features the company’s latest software, which includes a “concert-hall” level stereo sound experience. Additionally, the vehicle can hit a top speed of 105 miles per hour and has a range of about 364 miles. Most eye-catching, though, is the EV’s scissor doors, which give it a modern and sporty look.
While there isn’t enough data yet to analyze how this development will affect the company’s revenues and earnings going forward, traders are clearly excited. XPEV stock leapt roughly 12% following the news.
Xpeng Adopts Lidar, Angers Elon Musk
While the P7 Wing was Xpeng’s headlining event at the show, the company also made some more news. The EV maker announced that it will be using light detection and ranging (lidar) technology starting with its next generation of autonomous vehicles.
According to the company, the new technology — including the lidar system — will give it a “nearly tenfold increase in computing power.” That should allow Xpeng to jump to the next level of efficiency and safety within autonomous vehicles.
Not everyone is convinced that the lidar investment is going to pay off, however. Ark Investments analyst Tasha Keeney suggested over Twitter that while Xpeng’s approach should work, it would “severely limit scalability,” presumably due to the high cost of lidar.
At that point, Elon Musk himself jumped into the thread, writing, “They [Xpeng] have an old version of our software & don’t have our NN inference computer.” At another point, Musk doubled down on his allegations, claiming that the EV Maker had stolen code from both Tesla and Apple (NASDAQ:AAPL).
Needless to say, I’m sure we’ll see plenty of folks investigate this dispute in the coming weeks. In any case — if Xpeng’s lidar innovation ends up paying off — it would give the company a massive boost.
The Verdict on Xpeng
Long story short, XPEV stock has more than tripled in the span of three weeks. This is not normal market behavior. I don’t care how promising a company’s fundamentals are — you should be cautious when a share price advances this quickly.
That being said, Xpeng does look like it could be a long-term contender in the EV market. This is definitely one of the top-tier EV stocks to have on your watchlist. Just be careful trying to trade the stock above $60 when it was so recently down at $19. A perfectly normal correction back to $35 or $40 would burn a whole lot of folks that get into the party too late.
In other words, let the momentum cool off before getting on board with XPEV stock.
On the date of publication, Ian Bezek did not have (either directly or indirectly) any positions in the securities mentioned in this article.
Ian Bezek has written more than 1,000 articles for InvestorPlace.com and Seeking Alpha. He also worked as a Junior Analyst for Kerrisdale Capital, a $300 million New York City-based hedge fund. You can reach him on Twitter at @irbezek.