In reaction to Tesla’s (NASDAQ: TSLA) pricing cutbacks in China, XPeng (NYSE: XPEV) lowered the cost of its electric vehicles last week. Early on, investors saw XPeng’s move as a show of desperation and a strategy that may be detrimental to the company’s future success. Even if that’s still the case, it seems that price reductions are really what’s causing a boom in demand among Chinese buyers, at least for Tesla.
The demand for XPeng should increase since the price decreases will have a good effect on the company’s bottom line. However, Tesla and XPeng’s financial situations couldn’t be more different. While these price reductions may reduce Tesla’s profit margins, they will not lead to a loss in the company’s bottom line since Tesla is very profitable.
In order for XPeng’s price reduction to be profitable, the company will need to witness a dramatic increase in sales. This could be aided by the two new EV models, which are set to be launched in Europe on February 3, 2023. XPeng is set to increase its bets on Europe to increase its sales, and it’s worth watching this development.
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On February 1, XPeng will announce its January sales results, and investors will be hoping to see a significant increase over the 11,292 cars the company shipped in December. The success of the EV manufacturer’s most recent strategy won’t become apparent until then.
XPEV chart analysis
Shares of Chinese electric vehicle (EV) maker XPeng closed at $9.77 +$0.080 (0.83%) on Wednesday January 26, although the stock is up +$0.65 (7.13%) over the past five days.
In the last month, XPEV has been trading in the $8.86 – $12.09 range, which is quite wide. It is currently trading near the lows of this range. Support is located at $9.39 from a horizontal line in the weekly time frame and at $9.19 from a trend line in the daily time frame. A resistance zone ranging from $9.96 to $10.32, is formed by a combination of multiple trend lines and important moving averages in multiple time frames.
XPEV presents a compelling opportunity for traders. The recent consolidation in prices and reduction in volatility suggests that the stock is building a base from which it can potentially launch a new move higher. Additionally, the lack of resistance above the current price level suggests that there is significant upside potential.
The recent Pocket Pivot signal is also a bullish indication, as it suggests that buyers are accumulating shares at these levels. A Pocket Pivot pattern occurs when the price moves up with a volume higher than the maximum down volume registered in the previous 10 days.
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Disclaimer: The content on this site should not be considered investment advice. Investing is speculative. When investing, your capital is at risk.
