XPeng correction over past two days ‘looks overdone,’ says Morgan Stanley

Morgan Stanley notes XPeng (XPEV) ADRs are down 12% over the past two days as weak sector sentiment aggravated market concerns over the fallout of potential fundraising and margin pressure. However, this reaction “looks overdone,” the analyst tells investors. Major EV startups, like Xpeng, are “serial capital raisers that have yet to achieve a self-funding position,” says the firm, which can’t rule out any potential fundraising activity. However, the company’s “healthy” cash and equivalent position of $4.8B as of Q2, improving operating cash flow, and investment from VW (VWAGY) “should entitle XPeng to certain flexibility in picking better timing to seek any potential funding aids,” argues the analyst, who keeps an Overweight rating and $25.40 price target on XPeng ADRs.