Over the past few months, sentiment for Xpeng (NYSE:XPEV) stock has made a strong shift in sentiment, from bearish back to bullish. During this time, I have warmed back up to XPEV stock as well.
The reasons for this are manyfold. Not only that, there’s a good chance you are aware of most of these key reasons. For one, as you may have heard, the China-based electric vehicle (or EV) maker has experienced a big rebound in monthly deliveries.
It is also well-known that Xpeng has the global EV market, not just the Chinese domestic EV market, in its sights. You may know too that this upstart has recently established ties with a leading global automaker.
But what you and many investors could be less aware of is another solid catalyst for shares. One that, one could say, may in time really help to “elevate the stock.”
Here’s how.
A Run-Up Sustained by Substance, Not Hype
With speculative growth plays, it’s easy to assume that any rapid run-up in price is as attributable to hype as it is to substantive reasons. However, in the case of Xpeng, this run-up was driven and sustained by substance, not hype.
XPEV stock surged higher in June and July. This rally was driven by both solid delivery numbers, and the company’s announced entry into a long-term strategic partnership with German-based global automotive giant Volkswagen (OTCMKTS:VWAGY).
This partnership could prove very beneficial for both parties, as it could enable Xpeng to become profitable, and help Volkswagen gain lost ground in China.
Shares leveled off starting in August, but a spate of positive developments have kept them steady. At the start of September, Xpeng reported strong August delivery numbers.
Deliveries increased 24% on a month-over-month basis, and by 43% compared to the prior year’s month. Largely, thanks to the success of the recently launched G6 electric SUV coupe model.
Shortly after reporting these figures, the company made another announcement that bodes well for future performance.
On Sep. 4, Xpeng announced plans to expand into large European markets like Germany, France, and the U.K. next year.
This Potential Catalyst Could Spark a ‘Lift Off’
By now, you may wonder what exactly this under-the-radar catalyst for XPEV stock may be. Let me break it down for you. You are, of course, aware that is company is primarily a manufacturer of electric-powered passenger vehicles.
What’s far less known, though, is that this company is thrown its hat into the flying car ring as well. Flying cars, or to be more specific, electric vertical takeoff and landing aircraft have become a hot investing theme in 2023.
However, it’s not as if Xpeng is chasing this trend, only now getting into the space.
In fact, as Electrek reported back in January, the company’s Aero HT at the start of this year became the first crewed eVTOL to receive a flight permit in China.
While Xpeng is far from being the only first-mover in this fast-evolving industry, the fact the company is in the space today points to the company sustaining a higher level of growth, even after EVs reach critical mass around the world.
As I discussed in a recent article about a U.S.-based eVTOL contender, Archer Aviation (NYSE:ACHR), flying cars/eVTOLs could scale into a trillion-dollar industry in the coming decades.
The Bottom Line
Let’s be clear. Xpeng’s eVTOL catalyst is still far in the early stages. I wouldn’t count on it affecting the company’s financial results for quite some time. For now, the focus should be on the company’s for-now main EV business.
Speaking of which, keep in mind too that the company’s EV-related catalyst may not take shape immediately. That said, in the coming quarters, if multiple factors help to bring Xpeng closer to profitability, shares could experience another rally.
On a longer timeframe, reaching profitability in EVs, plus starting to commercialize its eVTOL technology, could spark an even stronger “lift off” for shares.
With these strong prospects in mind, feel free to follow the crowd’s lead with XPEV stock.
XPEV stock earns a B rating in Portfolio Grader.
On the date of publication, neither Louis Navellier nor the InvestorPlace Research Staff member primarily responsible for this article held (either directly or indirectly) any positions in the securities mentioned in this article.