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Yahoo
a day ago
- Automotive
- Yahoo
Nio's L90 Sales Are Soaring: Is It Time to Buy NIO Stock Now?
Nio (NIO) investors are bound to be an unhappy lot as the stock has closed in the red for four consecutive years and trades at a fraction of its 2021 highs. Nio was once seen as a promising Chinese electric vehicle (EV) startup company, with some dubbing it the 'Tesla of China.' The company, however, failed to meet those expectations, and the price action is a testament to its weak operating and financial performance. While Chinese rivals, particularly Xpeng Motors (XPEV), raced ahead in monthly deliveries, NIO's monthly deliveries have failed to move decisively higher. More News from Barchart 'It Will Be the Biggest Product Ever': Elon Musk Says Tesla's Optimus Robots Will Be Bigger Than Even Robotaxi Dear Archer Aviation Stock Fans, Mark Your Calendars for August 11 This Hidden-Gem AI Stock Has a Major Catalyst Coming on August 11 Our exclusive Barchart Brief newsletter is your FREE midday guide to what's moving stocks, sectors, and investor sentiment - delivered right when you need the info most. Subscribe today! Nio's New Models Failed to Lift Sales To spur deliveries, Nio came up with several new models, including in sub-brands Onvo and Firefly, which are budget vehicles priced below the eponymous brand, which the company has positioned as a premium EV brand. However, these new models did not help drive the expected increase in Nio's sales, even as Xpeng Motors managed to achieve scale with its Mona M03. Onvo was particularly a disappointment, and Nio admitted that its sales were below expectations. However, the recent launch of the L90 SUV under the Onvo brand could change the scenario, as reports suggest that the model has received a strong response and is proverbially flying off the shelves. L90 Is Priced Quite Competitively Nio has priced the L90 quite competitively at under $37,000 in domestic currency, which is below the pre-launch price. The car's price falls to just around $25,000 if the buyer opts for battery-as-a-service (BAAS) instead of buying the battery with the car. Nio's battery swap service helps it lower the initial buying price of the car, and the buyer can then buy the battery on a subscription. Just three days after the launch, the L90 has made it into the top 3 in large SUVs in China based on insurance data, and reports suggest that Nio is pushing to deliver over 10,000 of these in August. For context, ES6 and Onvo L60 are the only two other models from Nio that achieved a monthly sales volume in five figures. L90 has received positive reviews, especially for the value for money it brings to the table, as it offers premium features at an affordable price. That said, it remains to be seen whether the L90 sustains its initial sales momentum, as it's not uncommon for models to see strong demand at launch. Moreover, given the model's aggressive price, I would look for color on the margins that Nio expects to make on the model. Nio Stock Forecast Nio has been out of favor with sell-side analysts for quite some time now, even as Goldman Sachs upgraded it to a 'Neutral' from 'Sell' in June after the stock's YTD underperformance. Of the 16 analysts covering the stock, two rate it as a 'Strong Buy,' while two as a 'Moderate Buy.' Eleven analysts rate Nio as a 'hold,' while one analyst has rated the stock as a 'Strong Sell.' Amid the rally from its 2025 lows, Nio has run ahead of its mean target price of $4.54, but the Street-high target price of $8.10 is 73% higher than the Aug. 7 closing price. Should You Buy Nio Stock? Nio stock trades at a forward price-sales multiple of 0.79x, which is below Xpeng Motors and Li Auto (LI). However, both these companies have executed much better than Nio and also have higher margins. Nio has been a case of false starts, and while some of its previous models showed promise, the company failed to achieve scale with them. For Nio stock to rise from these levels, the company would need to reach a higher plateau in terms of monthly deliveries while improving its margins. The company has set an ambitious goal of reaching breakeven in the final quarter of this year, and the L90 would be a key moving part if it is to hit that goal. Overall, given the initial positive response to L90, I would stay put in Nio for now. However, I see it as a make-or-break moment for the company and would consider exiting the stock if the L90 momentum fizzles away, as some of the previous models have. On the date of publication, Mohit Oberoi had a position in: NVDA, LI, XPEV. All information and data in this article is solely for informational purposes. This article was originally published on 登入存取你的投資組合
Globe and Mail
28-05-2025
- Automotive
- Globe and Mail
Xpeng Motors Stock Forecast: Should You Buy the Dip in XPEV or Panic Sell Amid Price War?
While Xpeng Motors (XPEV) is up over 65% for the year to date, it has looked weak in recent days and has come off its highs. The company's Q1 2025 financial performance was quite impressive, but concerns over regulatory scrutiny over sales of new cars as 'used cars' in the second-hand market by some automotive companies in China and an escalating price war in China have pressured XPEV stock. In this article, we'll discuss whether you should buy the dip in the stock or steer clear. Xpeng Motors Stands Out Due to Strong Execution Xpeng Motors has impressed with its strong execution over the last few months. The company has delivered over 30,000 vehicles for six consecutive months, and its Q2 guidance implies that the run rate will be sustained in May and June as well. Xpeng Motors' Mona M03 has been a success story, and the model's cumulative sales have surpassed 100,000 units in eight months since its launch. The company's P7+ also achieved the milestone of 50,000 cumulative deliveries in the first five months of its launch. The strong growth in deliveries has resulted in economies of scale, and its gross margins have expanded for seven consecutive quarters, reaching a record high of 15.6% in the March quarter. The company is still posting a loss, but its net loss more than halved to $0.09 billion in Q1, which was the lowest in five years. The company has also turned a corner on free cash flow, and the metric surged above $400 million in Q1. Xpeng Motors Expects Strong Growth in 2026 Also Xpeng Motors expects its sales to more than double this year and is optimistic about posting a net profit in the final quarter of the year, while generating 'substantial free cash flow for the entire year.' The company expects its gross margin to push toward the high teens in the second half of the year, amid continued cost-cutting efforts. Xpeng Motors is set to launch several new models over the next year, which will help drive its deliveries in 2026 and beyond. Among others, it plans to launch new models in the Mona series, which is in the budget range. Xpeng Motors has developed its custom Turing chip, whose production has already commenced. The company will use these chips in its cars, which will help it lower costs and also enhance its autonomous driving capabilities. XPEV is leveraging its lead in autonomous driving and working on humanoids – a strategy similar to that of Tesla (TSLA). International expansion is another growth driver for Xpeng Motors. Last year, it sold 20,000 cars in global markets and expects the volumes to double in 2025. The company listed Europe, the Middle East, and Southeast Asia as its focus global markets for this year. China's EV Price War Is Worsening China boasts of dozens of electric vehicle (EV) companies, some of which happen to be listed stateside. The country is also home to BYD (BYDDY), which is the world's largest seller of new energy vehicles (NEVs), and looks set to dwarf Tesla's annual battery electric vehicle deliveries this year. While there has been a price war in China for the last few years, there are signs that things might worsen further as market leader BYD has also cut prices on multiple models. After the price cuts, BYD's seagull hatchback will be priced at just $7,780 in China. The company is looking to grow its deliveries to 5.5 million this year, as compared to just about 4.3 million last year, and the price cuts should help it meet the target. Notably, while BYD has aggressively slashed prices for lower-end cars, the premium lines have been spared from price cuts that will run until the end of June. So far, Xpeng Motors hasn't responded to the cuts, but the company might need to react to pricing strategies of its competitors, especially if BYD extends the scope of its cuts beyond June. While a price war is seldom a positive, Xpeng Motors should be able to tackle the headwinds better given its relatively strong financial position, as it had a cash pile of over $6.2 billion at the end of March. Also, the company has a technological advantage over most of its peers and offers a good value proposition with advanced self-driving features. From a valuation perspective, the stock trades at a next 12-month enterprise value-to-sales multiple of 1.46x, which is similar to what it has averaged over the last three years. However, after its impressive execution over the last few months, the stock has earned the right to trade at premium valuations. Overall, given the stock's positive long-term fundamentals, I won't panic sell XPEV amid the price war and will instead add to my existing positions if the stock comes under pressure. XPEV Stock Forecast Wall Street analysts are also reasonably bullish on XPEV, and it has a consensus rating of 'Moderate Buy' from the 14 analysts covering the stock. The stock has a mean target price of $22.83, which is 17.1% higher than the current price.
Globe and Mail
22-05-2025
- Automotive
- Globe and Mail
Up 76% YTD, This Chinese EV Stock Has Dwarfed Tesla with YTD Returns. Is It Time to Buy?
Tesla (TSLA) stock has struggled so far this year. The electric vehicle (EV) giant faces a range of short-term challenges that weigh heavily on its stock performance. Its vehicle deliveries have been underwhelming, and macroeconomic concerns have weighed on EV demand. Further, the highly competitive Chinese EV market has put additional pressure on the company and its stock price. Additionally, CEO Elon Musk's controversial involvement in the Department of Government Efficiency (DOGE) has impacted the company's reputation. As a result, Tesla's stock has declined roughly 17% year-to-date, significantly underperforming the broader market. In contrast, Xpeng (XPEV), a smaller Chinese EV company, has had an exceptional run in 2025. While comparing the two companies directly may not be entirely fair given Tesla's much larger scale, Xpeng has stood out with its operational strength. The company has steadily increased its vehicle deliveries, improved profit margins, and narrowed its financial losses. Moreover, Xpeng's management remains confident, projecting continued momentum into 2025. Xpeng's solid financials and its management's optimism are reflected in the stock's performance. Xpeng shares have soared more than 76% year-to-date and are up about 137% over the past 12 months. Despite this impressive rally, analysts believe there's still room for growth. The Street-high price target on Wall Street for Xpeng sits at $31 per share, implying more than 55% upside from current levels. Xpeng Defying Broader Challenges in the EV Industry While the broader EV industry is witnessing softness in demand, Xpeng posted its best-ever quarterly delivery numbers, with 94,008 vehicles delivered in Q1 2025, a remarkable 331% increase compared to last year. Besides higher volumes, Xpeng's focus on cost management and operational efficiency is adding to its appeal. Xpeng's vehicle gross margin has now improved for seven consecutive quarters, pushing the company's overall gross margin to a record high of 15.6% in Q1. This margin improvement stems from scale-driven efficiencies and ongoing cost reduction efforts. With rising margins, the company's bottom line is also showing notable improvement. Xpeng has significantly narrowed its net loss compared to the same period last year and reported solid free cash flow. Strong Outlook for Q2 and Beyond Looking ahead, Xpeng's growth engine shows no signs of slowing. Management projects deliveries between 102,000 and 108,000 vehicles in Q2, an increase of 237.7% to 257.5% year over year. Revenue is also expected to climb between 115.7% and 130.5%. The company's management is confident it will more than double its sales this year, expecting to turn profitable in the fourth quarter and generate substantial free cash flow for the full year. The second quarter will also see Xpeng introduce five upgraded or facelifted versions of existing models. While this could create short-term market volatility, these updates are a strategic move to strengthen the company's long-term product appeal. Starting in Q3, Xpeng plans to become more aggressive with its product rollout strategy, with a lineup that will include higher-priced vehicles carrying stronger profit margins. This shift will improve the overall mix and drive even healthier returns. International expansion will be another growth catalyst. Xpeng's overseas deliveries surged in Q1, and with more than 40 new stores launched abroad in the first quarter alone, the company is well on its way to building a significant global footprint. Management anticipates this overseas business will majorly contribute to revenue and profitability over the next three years. Beyond the core automotive business, Xpeng is investing in artificial intelligence (AI) and robotics. Its proprietary AI capabilities are already being integrated into its vehicles and will soon extend into humanoid robotics, targeting commercial and industrial applications. The company expects to roll out its first humanoid robot in 2026, which will significantly accelerate its growth. Conclusion: Is Xpeng Stock a Buy? Xpeng stock has been on an impressive run lately, which is why Wall Street analysts currently maintain a 'Moderate Buy' consensus rating. While Wall Street remains cautiously optimistic, Xpeng is delivering more vehicles than ever, with strong momentum in China and international markets. The company also has a strong pipeline of new models set to launch, keeping its product lineup fresh and competitive. Importantly, Xpeng's push toward profitability is beginning to pay off. Operational improvements are showing up in its financials, and the company is steadily reducing its losses. With strong growth prospects, improving financial health, and innovation in AI and humanoid robotics, Xpeng stock may continue to outperform the broader market, including Tesla.
Globe and Mail
10-04-2025
- Business
- Globe and Mail
Is Alibaba Stock a Buy or a Sell as Trump Singles Out China for Tariffs?
U.S. stocks soared yesterday, April 9, as President Donald Trump rolled back some import tariffs. However, while exporters from most countries took a sigh of relief as steep 'reciprocal' tariffs were granted a 90-day pause, Trump increased the tariffs on China to an astonishing 145%. China, too, has increased its tariffs on U.S. imports. And despite Trump singling out China for tariffs, Chinese stocks also gained yesterday. For instance, Alibaba (BABA) stock gained 5.4% while Xpeng Motors (XPEV) rose 6.2%. In a previous article, I noted that taking some profits off the table in Alibaba would be prudent after its breathtaking rally in recent months. In this article, we'll explore whether BABA shares are worth your money now amidst the steep tariffs. Chinese Stocks Rebounded After the Stimulus While Chinese stocks were literally untouchable for many foreign investors as recently as a year ago, the market started warming up to them after September 2024. China began unveiling a flurry of stimulus measures to support its economy and reattract investment. However, more powerful than the stimulus, Chinese President Xi Jinping's meeting with Chinese entrepreneurs including Alibaba's co-founder Jack Ma in February 2025 helped improve the sentiment toward Chinese shares. Ma and Alibaba became the face of China's tech crackdown, so the meeting was quite an about-turn for the country's political leadership and a clear sign that the world's second-largest economy was backing its private sector amid the structural economic slowdown. Alibaba to Benefit from the Revival in Chinese Consumption Amid Trump's tariffs, China might announce further stimulus steps to support its economy. The country has already taken measures to revive domestic consumption, benefiting names like Alibaba, which is the largest e-commerce company in the country. Moreover, Alibaba has emerged as a key player in the artificial intelligence (AI) space. Chinese companies offering goods at prices that most, if not all, Western manufacturers cannot match, is not really news. However, they are taking their price advantage to the services industry, as is visible in AI and autonomous driving. Ever since DeepSeek shook the market with its low-cost AI model, several Chinese companies including Alibaba have announced cheap AI models that give competitors from U.S. tech giants a tough fight in terms of features while being offered at a fraction of the cost. AI should drive Alibaba's next leg of growth as the company expands its prowess. Over the medium to long term, listing its fintech subsidiary Ant Financial would also help Alibaba unlock value. For context, that IPO was halted by China in 2020, apparently to target Ma. By meeting private entrepreneurs including Ma in February, the Chinese president has signaled that the crackdown on private tech companies is now in the rearview. With Alibaba now back in the 'good books' of the Chinese government, its regulatory woes appear over. Should You Buy BABA Stock? Regulatory challenges took a toll on Alibaba's valuations and the stock traded at depressed single-digit price-earnings (P/E) multiples. While the valuation multiples expanded as the stock rallied, they have dipped after the recent fall. BABA now trades at a forward P/E multiple of 9.9x, which does not look demanding, especially considering the almost 25% earnings growth the company is expected to post in its fiscal year 2026. While tariff uncertainty looks here to stay and a U.S.-China trade deal might take longer deals with other countries, eventually, the world's two biggest economies should find a way to address what at best looks like a war of mutual destruction. Overall, I find BABA shares attractive after the crash and added to my positions after having previously booked profits. Alibaba Stock Forecast Brokerages are also quite bullish on BABA and of the 20 analysts actively covering the stock, all grant it a 'Strong Buy' rating. Alibaba's mean target price of $149 is 41% higher than current prices while the Street-high target price of $190 is 81% higher.
Globe and Mail
20-03-2025
- Automotive
- Globe and Mail
How High Can This Growth Stock Go After Doubling in 2025?
U.S. stocks have had a rough ride in 2025, and last week, the S&P 500 Index ($SPX) joined the Nasdaq Composite Index ($NASX) in the correction zone. While markets have rebounded from their lows, they are still in the red for the year. Moreover, 'Magnificent 7' companies are all trading lower in 2025. Meanwhile, while U.S. stocks have whipsawed and look vulnerable, their counterparts in China are having a good run. Specifically, Chinese electric vehicle (EV) company Xpeng Motors (XPEV) has nearly doubled in 2025. In this article, we'll examine whether the stock can continue its rally from these levels. Why Has Xpeng Motors' Stock Rallied? Chinese stocks have been the flavor of the season this year amid renewed interest from global investors. China has set a GDP growth target of 'around 5%' for 2025 and recently announced a plan to boost consumption. Moreover, the artificial intelligence (AI) euphoria that propelled U.S. stocks higher in 2023 and 2024 has moved to China ever since DeepSeek revealed that its AI model performed better than AI models from Meta Platforms (META) and OpenAI… and at a lower development cost. But then, Xpeng Motors' rally hasn't been all about the macroeconomy, as it is outperforming its Chinese EV peers by a wide margin in 2025. The company has impressed with its performance and its deliveries topped emerging Chinese EV companies in the first two months of the year. It also outsold Li Auto (LI), which at its peak last year was selling more vehicles in a month than Nio (NIO) and Xpeng Motors combined. Xpeng Motors has also benefited from the AI rally in China as the company has some of the most advanced autonomous driving technology in the country. It is hopeful of achieving L3 autonomy later this year and L4 – or fully autonomous driving – in 'low-speed scenarios' next year. Xpeng Motors is perhaps the most ambitious emerging new energy vehicle (NEV) company in China. It aims to mass-produce humanoid robots and flying cars by 2026. Investors have grabbed the stock to bet on China's AI pivot. How High Can Xpeng Motors Stock Go? After Xpeng Motors' Q4 earnings release, JPMorgan slashed its target price to $31 which is just over 30% higher than the March 19 closing price and is the Street-high target price for the Chinese EV company. Xpeng Motors has a consensus rating of 'Moderate Buy' from analysts and it currently trades above its mean target price. Sell-side analysts have been mixed on XPEV this year, and while UBS, Citi, and Nomura have upgraded the stock by one notch, Macquarie and Daiwa have downgraded the stock. Macquarie incidentally flipped-flopped on Li Auto and downgraded it earlier this month after having previously upgraded it to an 'Outperform' in February. Why the Best Is Not Yet Over for Xpeng Motors While there could be some profit taking in Xpeng Motors shares after the recent rally, I believe the best is yet to come for the company. Looking at the short to medium term, Xpeng Motors expects its deliveries to double this year which would imply shipments in the range of 380,000 in 2025. The company is looking to launch new or updated versions every quarter beginning in 2025 and these new models – spread across various price points – will help increase the company's target market. Upgrades to autonomous driving software will also help propel Xpeng Motors' sales and would act as a differentiator by widening its superiority over peers. Xpeng Motors' Long-Term Forecast During the Q4 2024 earnings call, Xpeng Motors listed three growth pillars for the long term. These are: AI-powered vehicles: Xpeng Motors has developed its custom Turing chip, with mass production expected in 2026. The company listed progress in AI-powered cars as a key long-term strategic growth driver. International expansion: Last year, Xpeng Motors sold 20,000 cars in global markets and expects the volumes to double in 2025. The company sees international expansion as a key driver, and while Chinese EVs face stiff tariffs in the U.S., Canada, and the EU, Chinese automakers have been expanding elsewhere. Humanoids: Xpeng Motors is also developing humanoid robots which will be another key long-term driver. To be sure, the growth drivers for Xpeng Motors don't look much different from those of Tesla (TSLA), which is also betting on autonomous driving and robotaxis in the short term while banking on humanoid robots and other AI products in the long term. However, Tesla's growth story appears to have stalled as its vehicle sales have been tepid, at least in part due to CEO Elon Musk's political activities. Xpeng Motors' vehicle margins have improved for six consecutive quarters and the company generated free cash flows of around $275 million in the back half of 2024, ending the year with cash and cash equivalents of $5.75 billion. The company has forecast profitability in the final quarter of the year led by cost cuts and economies of scale. From a valuation perspective, XPEV trades at a forward enterprise value-sales multiple of 1.86x, which is twice that of Nio and over thrice of Li Auto. However, I believe that given Xpeng Motors' growth trajectory for 2025 and its position as a prominent AI play, the stock can command a premium. While there could be some short-term weakness in XPEV stock, I believe the company's long-term growth looks firmly on track as it strives to become the 'Tesla of China' – a title that was previously associated with Nio.
