XPeng gave a somewhat mixed EV delivery outlook early Wednesday after missing revenue expectations for the third quarter. XPeng stock turned higher amid competition and margin worries.
"Promotional activity appeared more aggressive than anticipated," Deutsche Bank analyst Edison Yu said after the XPeng earnings report.
Losses widened in the quarter as higher costs offset a surge in electric vehicle sales.
Ahead of the report, Yu called XPEV stock a "top pick" in China's "ultra competitive" market for electric vehicles, which has seen a price war led by Tesla this year.
XPeng Earnings
Estimates: Analysts, on average, expected XPeng to widen losses to 47 cents per ADR share from a loss of 39 cents a year ago, according to FactSet. Revenue was seen surging 25%, year over year, to $1.19 billion.
Results: XPeng lost 62 cents per ADR, worse than feared. Revenue jumped 22% to $1.17 billion, slightly missing views. It did mark the first revenue gain since Q3 2022 and a return to more than $1 billion in sales for the first time since Q2 2022, FactSet shows.
Gross margin was negative 2.7% vs. 13.5% in Q3 2022 and negative 3.9% in Q2 2023.
Deutsche Bank analysts tied the revenue miss and "weak" gross margin to lower-than-expected average selling prices (ASP).
Costs of sales reached $1.2 billion, rising both year over year and quarter over quarter, the company said.
Outlook: XPeng sees Q4 deliveries of 59,500-63,500 electric vehicles, up from 40,008 in Q3. The EV maker has already reported record October deliveries of 20,002, meaning it expects 39,498-43,498 deliveries in November and December.
Analysts at Deutsche Bank called the Q4 delivery outlook "mostly solid," saying it implies November and December will be "flattish at the mid-point" and ASPs appear "generally softer" and lower than expected.
"On the earnings call, we will look for further commentary on the vehicle margin trajectory, competitive landscape (in the context of several new models hitting the market at aggressive price points), and initial views toward 2024," they said.
XPeng Stock
U.S.-listed shares of XPeng initially fell on the stock market today, then reversed higher to close up 2.3% to 17.39. XPeng stock overcame resistance at the 50-day moving average Tuesday, rocketing 8.6% to 17.01, the MarketSmith chart shows.
Li Auto gave strong guidance for the current fourth quarter last week after beating earnings estimates for the third quarter. Li stock rose 1.7% to 40.53 Wednesday, flashing an early entry.
Nio popped 4.76%. It has yet to announce an earnings date.
Chinese giant BYD reported record Q3 earnings in late October. BYDDF stock rose 1.1% to 32.30 after clearing an aggressive entry Tuesday.
Another forthcoming China EV stock is Zeekr, a premium brand from car giant Geely. It should list its shares "within weeks" on the New York Stock Exchange under the symbol "ZK," Reuters said Nov. 9.
A new XPeng electric vehicle, set to be unveiled Nov. 17, will compete directly against Li Auto's highly anticipated Mega EV, local media reports said on Tuesday.
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'Top Pick' XPEV Stock
The Xpeng X9 multipurpose vehicle will be unveiled and go on pre-sale on Nov. 17, the company said Tuesday, according to CnEVPost.com. The X9 will challenge the Mega van, Li Auto's first battery electric vehicle, which will also be unveiled and go on sale the same day.
In early November, XPeng disclosed record October sales. After a tough 2022, XPeng said it has now grown EV deliveries sequentially for eight straight months.
XPeng generally targets a lower price point than Nio and Li Auto's more premium offerings. Its G6 electric SUV is seen as a Tesla Model Y challenger.
For the current Q4, Yu expects a "robust" outlook after stronger-than-expected October deliveries.
