The $31 Billion Question: What’s the Outlook for XPeng Inc.?

The outlook for Chinese electric-vehicle maker XPeng Inc. has become a subject of intense debate among sell-side analysts. A Bloomberg analysis reveals that analysts have differing opinions on the price targets for the company’s stock, with some predicting a surge to HK$196 and others anticipating a slump to HK$18 over the next 12 months. This wide disparity has contributed to significant volatility in XPeng’s shares, which have experienced substantial fluctuations in recent weeks.

One source of uncertainty for XPeng is the potential impact of tariffs imposed by the European Union on Chinese EV imports. While this briefly affected shares in the sector, the company faces additional challenges at home. Price cuts within the industry have eroded margins, and analysts have expressed skepticism about the benefits of XPeng’s partnership with Volkswagen AG. Consequently, there is a $31 billion gap in market value between the two extreme price targets for XPeng in Hong Kong, highlighting the prevailing uncertainty in a slowing economy.

To some analysts, XPeng’s focus on developing autonomous driving software and its partnership with Volkswagen AG are reasons for optimism. HSBC Holdings Plc recently upgraded their outlook for the company, which further bolsters confidence in its performance. However, caution remains, as short-selling activity has increased, and XPeng has a reputation for prioritizing lower-priced models at the expense of profits.

Investors are closely monitoring key measures such as margins and production outlook to gauge XPeng’s prospects. Overcoming production bottlenecks and improving operating margins will likely be crucial factors in determining the company’s future success. In the meantime, analysts believe that a more conservative target may be appropriate until these challenges are addressed.

Source: Bloomberg (no URL available)