XPeng Holds Critical Support Going Into Earnings: A Technical Look

XPeng Inc - ADR XPEV is set to report its first-quarter 2021 earnings before the opening bell on Thursday amid an electric vehicle sector rout led by Tesla Inc TSLA.

When Xpeng announced its fourth-quarter 2020 earnings on March 8, the company reported revenues of $437 million, a 345.5% increase quarter-over-quarter and a non-GAAP loss per ADS of 15 cents versus the consensus estimate of 12 cents. Xpeng’s stock reacted with a higher open, following its earnings release, but quickly sold off and ended the day down over 4%.

A stock’s reaction to earnings is often unpredictable and an earnings miss doesn’t necessarily equate to the stock losing value, just as an earnings beat doesn’t mean the share price will rise. A run-up into earnings is often a negative situation for bulls because the stock will often fall afterward even on a big earnings beat.

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The Xpeng Chart: Xpeng’s stock has not run up into its first-quarter earnings event. On Tuesday, Xpeng dropped down and hit a support level near $23, which is the lowest the stock has traded at since November 2020. Over the past few weeks, Xpeng’s stock has traded in tight daily ranges in comparison to the months prior as it tries to find a bottom.

Xpeng is trading below both the eight-day and 21-day exponential moving averages (EMAs), with the eight-day EMA trending below the 21-day EMA, all of which are bearish indicators.

The 200-day simple moving average is not available for Xpeng’s stock because it hasn’t been trading for 200 days since its public listing on Aug. 27, 2020.

Bulls want to see large bullish volume come in following an earnings beat to push Xpeng’s stock back up over resistance at $29.77, which would help it to recapture the eight-day and 21-day EMAs. If it is able to use that area as support, there is room to move back up towards the $36 mark.

Bulls want to see an earnings miss and for bearish volume to drop the stock down below $23.08. If Xpeng’s stock loses that support level it could revisit the $20 level.

XPEV Price Action: Shares of Xpeng were trading up 1.00% at $25.18 Wednesday afternoon at publication.

(Photo: XPeng)