XPeng stock price continued its consolidation this month, even as its growth trajectory accelerated. XPEV was trading at $18.85 in New York, much lower than the year-to-date high of $27.15. This article explains why the XPeng share price is poised for a bullish breakout.
XPeng stock price has strong technicals
One key reason why the XPEV stock price is poised for a bullish breakout is its strong technical indicators. The daily chart shows that the stock has remained in a tight range in the past few weeks.
This consolidation is bullish because it is part of the formation of the cup-and-handle pattern, a popular continuation sign. This pattern comprises of a horizontal resistance and a rounded bottom, whose lower side is at $6.60. In this case, the cup has a depth of approximately 72% or $ 16.80.
The pattern also features a handle, which is currently being formed. The stock is also consolidating at the 100-day and 200-day Exponential Moving Averages (EMA).
The stock has also formed a bullish pennant pattern, comprising of a vertical line and a symmetrical triangle. Therefore, the most likely scenario is where the stock rebounds and hits the upper side of the cup at $23.47.
The cup-and-handle’s target price is estimated by measuring the cup’s depth from its upper side. In this case, the target price is $40, which is about 112% above the current level.
Strong growth momentum continues
The other bullish catalyst for the XPeng stock price is that the company continues to experience strong growth in a highly competitive market.
Data shows that its annual revenue has been in a strong uptrend in the past few years as it vehicles became popular. XPeng’s annual revenue rose from $895 million in 2020 to over $6.9 billion in the trailing twelve months, a 660% surge.
This growth momentum happened at a time when XPeng’s business faced substantial competition from the likes of BYD, Tesla, Nio, and Xiaomi.
The most recent numbers showed that the company’s growth momentum is continuing. XPeng delivered 34,611 vehicles in June, up by 224% from the same period last year.
The company sold 103,181 vehicles in the second quarter of the year, a record figure. Most importantly, its first-half revenues soared to 197,189, more than what it sold in 2024.
XPeng aims to sustain this acceleration by expanding into international markets. For example, it launched the XPENG X9 in Indonesia, bringing its international markets to 40 countries.
As a result, analysts anticipate that its growth will be supercharged this year. Its second quarter revenue is expected to be CNY 18.62 billion, a 129% increase from the same quarter last year.
The analysts expect its annual revenue to jump by 101% to CNY 82.36 billion, followed by 112 billion yuan in the coming year.
Read more: XPeng stock price pattern points to a surge to $40 soon
Most importantly, the company is on a path towards profitability. Its earnings per share last year stood at CNY 5.87, and analysts anticipate it to improve to CNY 1.9. It will then make a profit of 2.2 CNY next year.
Therefore, a combination of strong revenue growth and path towards profitability will help to supercharge its stock. Indeed, the average stock target of $25 is much higher than the current $18.85.
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