Should I invest in EV stock Xpeng following their Q4 results?

Shares of Xpeng (NYSE: XPEV) trade about 20% higher in the past two days after a sharp selloff wiped off nearly 70% of the company’s valuation. 

Fundamental analysis: Q4 net loss shrank by 42%

Chinese EV company Xpeng reported its net loss in Q4 2020 shrank by 42% compared to the same quarter in 2019 as EV sales surged in China. The EV said its net loss in the last quarter last year was 787.4 million yuan ($120.7 million) for the quarter, down from 1,354.6 million yuan in Q4 2019.

Furthermore, revenue surged by 346% in the same quarter to 2.85 compared to the year-ago period. Xpeng said it estimates its revenue for Q1 2021 to be roughly 2.6 billion yuan, 531% higher than in the first quarter of last year. 

The EV is expected to roll out its second sedan by the end of June and a redesigned version of its G3 sport-utility car by the end of 2021, Xpeng’s president Brian Gu said.

Gu said his EV company will launch a series of 7-8 new models by the end of 2024. He also said that he expects revenues from software and content to account for about 10% of its total income in the future.

Xpeng also plans to build its third car-assembly plant in China. The company delivered 12,964 vehicles during the fourth quarter of 2020. It recently presented its autonomous highway driving features.

Technical analysis: Volatile price action

XPEV has staged a strong rebound following a sharp selloff in EV stocks, led by Tesla, amid concerns over stretched valuations in this sector. At one point, Xpeng stock traded almost 70% lower compared to its record highs set in November. 

Xpeng daily chart (TradingView)

The price action came close to touching a clear-cut buy zone defined by the horizontal support line and Fibonacci retracement and extension levels. This zone, sitting just below the $24 mark, will continue to offer support while the key near-term resistance is located at $37.50.

Summary

Chinese electric carmaker Xpeng said its net loss in the fourth quarter last year narrowed by 42% from the same quarter in 2019 as EV sales rose in China, the largest auto market in the world. EV investors used the opportunity to buy the XPEV stock, which now trades about 20% off the multi-month lows set last week.

The post Should I invest in EV stock Xpeng following their Q4 results? appeared first on Invezz.