Of the two stocks, NIO has shown a 156% improvement in its (negative) PE Ratio while XPeng has shown an 89% improvement.

This is a rather interesting development which lends itself to some more extrapolations. The past year has seen a significant decline in retail investor participation. With that vanished the relative high convictions that led to massive gap in PE Ratios in both stocks seen in previous periods. This lends itself the idea that current drivers of stock trajectory are primarily institutional player volumes with a distinct long-term outlook, possibly in NIO more so than XPeng.

In Conclusion

A recent note from Bank of America indicated that sales of Tesla’s products in China have dropped by 31% month-over-month in July, while its main competitor BYD Auto, grew 4% month-over-month. The note also concluded that this was likely not driven by local economic factors. Given the statistics presented here, it’s evident that Chinese EV carmakers catering to the mid- to high-income segments have come into their own and are able to attract higher buy-ins than ever before. Given the size of the market, BYD wouldn’t be the only beneficiary. The likes of NIO and XPeng would likely see stronger demand in the coming months and years. This long-term outlook is what inspired strategic investors to buy into this stock, regardless of their lack of profitability. Even this has a remedy in time and sustained performance.

Overall, there is no expectation that either stock would make a massive comeback such that it outperforms the broad market on a Year-to-Date (YTD) any time soon. However, for investors with the wherewithal to allocate capital and wait over a period of years, either or both stocks are worthy of consideration. XPeng is scheduled to release its Q2 earnings on the 18th of August, while NIO is expected to do the same sometime in September. Both earnings releases will prove to make for interesting reading.

Meanwhile, given that that an institutional hand is steering the trajectory, professional investors could deploy Exchange-Traded Products (ETPs) to make short-term gains from both stocks’ short-term trajectories. NIO3 gives a 3X exposure to the upside of NIO’s stock while SNIO does the same on the downside. Similarly, XPE3 gives a 3X exposure to the upside of XPeng’s stock while XP3S does the same on the downside.