Xpeng (NYSE:XPEV), the Chinese electric vehicle (EV) maker, continues from strength to strength. Xpeng stock will track Nio‘s (NYSE:NIO) rise as it’s on a similar growth path as its larger EV peer.
If we compare both companies, we see that Xpeng is starting to catch up with Nio. In fact, this implies that its market value and Xpeng stock should be at least 64% higher than it is today at $95 per share.
Comparing Growth Rates at Xpeng and Nio
For example, on Jan. 5, Xpeng reported blowout Dec. 2020 growth, just like Nio did. Xpeng had a 26% increase year-over-year in monthly deliveries and a 35% increase in month-over-month growth. Moreover, its quarterly delivery growth was up 303% year-over-year, and 51% quarter-over-quarter.
By comparison, Nio said it had quarterly delivery growth of 42.2% over the prior quarter. That is even a bit lower than Xpeng’s 51% growth rate.
This might be expected since Nio delivered a third more EVs – 17,353 EVs vs. Xpeng’s 12,964 EV deliveries during the quarter. That means Nio’s quarterly deliveries were only 33.8% more than Xpeng’s. Another way to put it is Xpeng is now at 74.7% of Nio’s delivery rate as of Q4.
Xpeng has a slightly higher growth rate since it has a lower base number of EV deliveries. But Xpeng is basically tracking Nio’s growth.
For example, both companies produced exactly 112% growth in EV deliveries during 2020. So, they are tracking very similar growth rates.
The only difference is that Nio is about a third larger in terms of deliveries by Q4. But for all of 2020, this was not the case. For example, Xpeng delivered 27,041 EVs during 2020 and Nio delivered 43,728. That is about 61.7% more. So, by the Q4, with Nio only about 34% ahead of Xpeng, this implies that Xpeng has been experiencing faster delivery growth than Nio.
What Xpeng Is Worth
But consider this. Nio stock has a $91 billion market capitalization but Xpeng’s market cap is 39.3% of this at $35.8 billion.
But if Xpeng is delivering almost 75% as many EVs as Nio. Therefore, it should have 75% of Nio’s market cap, or $67.9 billion (i.e., 74.7% times $93.7 billion).
That means Xpeng is worth 64.7% more (i.e., $67.9 billion divided by $24 billion minus 1). In other words, Xpeng stock should be trading 64.7% higher than $58, its current price, or $95.50 per share.
That is if Xpeng keeps on its similar growth path as Nio, and in fact, seems to be growing slightly faster than the company, at least in terms of deliveries.
However, we will need to analyze the two companies’ sales and earnings when they come out soon. This may temper the valuation a bit.
But don’t forget the point I made in my last article on Xpeng stock on Dec. 31. Eventually Xpeng stock will have a similar market cap as Nio, as its growth tracks on.
What To Do With Xpeng Stock
I am not the only analyst who believes Xpeng stock is worth more than today. For example, TipRanks.com reports that the average price target of 7 seven Wall Street analysts is $51.25. However, the high price target for that group is $59.
Moreover, Marketbeat.com reports that there are seven analysts whose average price target is $53.87 per share. But again, the high price for the group is $59.
My estimate of $95 for Xpeng stock is higher than most analysts.
But my forecasts for the stock have been on target so far. For example, last month I said it was worth at least $82. It is up 17% year-to-date and is up 20% in the last month. I am going to stick with my analysis on Xpeng stock, which is working so far.
On the date of publication, Mark R. Hake did not have (either directly or indirectly) any positions in any of the securities mentioned in this article.
Mark Hake writes articles on personal investing at mrhake.medium.com and runs the Total Yield Value Guide which you can review here.