Is This Warren Buffett-Backed EV Stock a Buy Right Now?

Even prior to the heavy selling that pressured stocks lower across the globe in recent sessions, the electric vehicle (EV) industry was facing particularly stiff headwinds. High interest rates and stubborn inflation made for a tough environment for high-ticket discretionary items like EVs, and the result was an all-out price war that pressured margins industry-wide. While some smaller startups have folded entirely, even the sector's finest - from Tesla (TSLA) to Byd Company (BYDDY) - have undergone major corrections. 

Even as inflation cools and a rate cut seems imminent, EV front-runners continue to grapple with inventory backlogs, a slowdown in the Chinese economy, and fresh uncertainties over the U.S. economy, too. However, with BYDDY now down about 20% from 52-week highs, it could be time to consider an entry point on this EV market standout.

About BYDDY Stock

Founded in 1995 and based in Shenzhen, Byd Company (BYDDY) is a leading Chinese electric vehicle manufacturer renowned for its advanced hybrid powertrain technology that offers up to 1,200 miles of range. The company specializes in researching, developing, and producing automobiles, batteries, and mobile phone components. It operates globally, including in China, Hong Kong, Macau, Taiwan, and various international markets. 

BYDDY commands a market cap of $83 billion, and offers both plug-in hybrid vehicles and battery electric vehicles.

And of course, let's not forget Warren Buffett's stake in the company. Despite Berkshire Hathaway (BRK.B)trimming its BYDDY holdings in recent quarters as it builds a massive cash hoard, the Buffett-run conglomerate still holds a 4.9% stake in BYDDY via its equity portfolio, per mid-July data. That's worth about $1.5 billion, or 0.5% of Berkshire's total equity portfolio. 

Is BYDDY Stock a Good Value Right Now?

Byd Company shares are slightly negative on a YTD basis, underperforming the broader equities market. Since their 52-week lows in February, though, the shares have bounced about 25% higher.

BYDDY shares are trading at a forward P/E ratio of 17.84 and price/sales of 0.81, suggesting the stock is priced right in line with its consumer discretionary peers.

Plus, investing in Byd Company offers the relatively rare opportunity for dividends in the EV space, making it a standout choice for investors seeking passive income. The company pays an annual dividend of $0.87 per share, yielding 1.56% at current levels.

BYDDY Posts Record Deliveries

Byd Company has shown consistently solid delivery growth in the past four quarters, and that continued in Q2 this year. Q2 sales hit a record of 986,720 overall, up 58% from the prior year and 40% sequentially. BYDDY delivered 426,039 battery EVs during the quarter, falling short of Tesla's market-leading total by only 18,000 vehicles.

For July, plug-in hybrid sales rose for the fifth consecutive month, up nearly 67% year over year to 210,799 units. BYDDY has now sold more than 1 million PHEVs this year, an increase of 44% from 2023.
Looking at BYDDY's Q1 financials, the firm posted revenue of $17.2 billion, missing the consensus estimate. However, BYDDY reported record gross margins of 21.9%, led by 28.1% margins for the Auto business. That's significantly higher than most of its peers in the industry. This shows the firm's ability to maintain high production standards and control expenses within an increasingly competitive market situation.

Byd Company is expected to report earnings again later this month, where margins and deliveries again will likely be key metrics in focus.

BYDDY Partners With Uber

Recently, Byd Company announced a new partnership with Uber(UBER) to boost EV adoption and develop autonomous vehicles on the ridesharing platform. This multi-year deal will launch in Europe and Latin America, with plans to expand to the Middle East, Canada, Australia, and New Zealand. The partnership aims to introduce 100,000 electric vehicles on Uber's platform, reduce EV costs, and enhance fuel adoption.

Through this deal, Byd Company will offer Uber drivers incentives for switching to electric cars, including discounts on maintenance, charging, financing, and leasing options, while integrating its self-driving technologies into Uber’s platform. This collaboration is expected to strengthen BYDDY’s reputation in the EV sector in the coming months.

Amid rising trade tensions with the U.S., China-based BYDDY is avoiding Uber's home market for now, with reports now indicating that Chinese software could be banned in autonomous vehicles.

Earlier this year, however, Byd Company announced it would build a manufacturing plant in the EU member state of Hungary. This strategic move is expected to enhance Byd Company's production capabilities in Europe, reduce logistics costs, and mitigate the impact of import tariffs.

More Recent News about BYDDY

On July 6, Reuters reported that Byd Company would acquire a 20% stake in Thailand's Rever Automotive, its top distributor in the region. This move strengthens BYD's market position following the recent opening of its $490 million factory in Thailand. BYDDY holds a 46% market share in Thailand's EV sector.

Separately, Spy Shots recently revealed a new Byd Company Han. The sedan features aerodynamic tweaks like a U-shaped hood and a flatter B-pillar. The powertrain remains uncertain, with potential all-electric or plug-in hybrid options. 

Previously, in May 2024, the company introduced its flagship truck, the Shark. Additionally, the firm is set to release an EV called the Seagull at a very affordable price, masterfully integrating advanced features and cost-effectiveness.

What Do Analysts Think About BYDDY?

From an analyst's perspective, BYDDY stock currently offers a compelling investment opportunity with significant upside potential. Along with Buffett's ongoing endorsement, all seven Wall Street analysts covering the EV stock have given it a unanimous "Strong Buy" rating.

The price target for BYDDY stock is set at $72, indicating an expected 31.6% premium to its current trading level.