XPeng IPO Roars Past Expectations, Beats Barron's Estimates

"We were too conservative" admits Barron's after XPeng opens at over 54% higher than than initial pricing.

Jennifer Chan
    Aug 27, 2020 12:19 PM  PT
XPeng IPO Roars Past Expectations, Beats Barron's Estimates
author: Jennifer Chan   

So much for the notion that American investors won't take to new Chinese stocks. Electric car maker Xpeng (NYSE:XPEV) accelerated onto the New York Stock Exchange today leaving naysayers in the dust. 

The company sold more shares for more money than it planned in its initial public offering, or IPO, priced Wednesday evening at $15 per share. Early on, it opened up well above at $23.10 per share. This shocked the resepected financial media company Barron's which was bullish on the IPO. Barron's wrote:

"Barron's suggested the stock could open 20% higher. We were too conservative."

The stock hit a high of $24.69 before correcting. As of 3:15 EST, the stock was still at $22.70 pre share, up over 50% from the offering price. 

The company's stellar IPO day today is yet another sign that demand for EV stocks is through the roof.

XPeng expected to sell 85 million American depository receipts, or ADRs, for about $12. The company ended up selling 100 million ADRs for $15 each, raising roughly $1.5 billion in the process.

The IPO values the EV startup between $10 and $11 billion. Li Auto (LI), another Chinese EV maker, is valued at about $16.2 billion. Another peer NIO (NIO) is valued at about $25 billion. However, neither LI Auto nor NIO were valued as high as XPeng at their IPOs. 

Based in Guangzhou, China's auto manufacturing hub, XPeng sells two smart electric vehicles, the G3 and P7. The latter, a sports sedan P7, can run 439 miles on a single charge. As to the G3, an SUV, according to research by the IHS Markit, the company said in its filing that the G3 was among the top-three best-selling electric SUVs in China in 2019. 

For the first half-year, XPeng reported $141.9 million in revenues, down 19% from the same period in 2019. Net loss narrowed 59% year-over-year to $112.6 million. In the full year 2019, XPeng generated revenues of $328.5 million on losses of $522.5 million, according to the filing.

XPeng said it delivered 2,451 smart EVs in July, or 1,641 P7s and 810 G3s.

XPeng's IPO closely follows a highly successful listing of Li Auto, which sells the Li ONE six-seater smart electric SUV. The company raised $1.1 billion in IPO on July 30, priced at $11.50 per American depositary share, and soared nearly 40% upon debut. 

XPeng's target consumer is China's mid- to high-end segment, with prices on their vehicles ranging from 150,000 yuan to 300,000 yuan.

Next year, XPeng plans to release its third smart electric car, a sedan, as well as the next version of XPILOT – the 3.0.

Whether XPeng will zoom past other Chinese EV makers in the market like NIO, Li Auto, and Kandi remains to be seen. 

Market commentators keep talking about the next Tesla (Nasdaq: TSLA). In XPeng, have investors finally found it?