Shares of the Chinese manufacturer of electric vehicles, XPeng (NASDAQ: XPEV), are trading over 20% lower in August after the EV company disclosed a wider-then-anticipated loss for the second quarter and disappointing delivery expectations.
How Did XPeng Perform Last Quarter?
Business updates from XPeng sent its Hong Kong-listed shares plummeting. The EV company announced a net loss of 2.7 billion Chinese yuan ($403.2 million), a significantly wider loss compared to the 1.6 billion Chinese yuan that Refinitiv consensus forecasts predicted.
Although XPeng stated that it anticipates delivering between 29,000 and 31,000 electric vehicles in the third quarter – indicating an increase of between 13% to 20.8% year over year – the fact that the market was expecting 46,000 deliveries is what sent shares lower.
In a conversation with CNBC’s “Street Signs Asia”, Barclays’ analyst Jiong Shao believes the disappointing guidance for Q3 is the main reason behind the share price fall.
“Well the second quarter results were actually not bad at all. The revenue was even a little bit better than what we expected. And the earnings, or I should say loss, were narrower than what we expected,” Jiong Shao said. “The problem … was really the forward Q3 delivery guidance, which is about 40% below prior estimates we had. That’s what happened to the stock price.”
XPeng’s President Brian Gu tried to reason the new guidance by stating “relatively slow season” and that “traffic in the stores are less than what we’ve seen before because (of the) post-COVID situation.”
China had a revival of Covid-19 in the second quarter of the year. Major cities nationwide, including Shanghai, the nation’s financial center, were shut down as a result of the authorities’ response.
However, Gu turned the focus on the more optimistic aspects, noting that the seasonal performance in the fourth quarter and new car models including the G9 deliveries should all contribute to XPeng’s growth.
G9 Deliveries Starting Next Month
According to XPeng, the G9, a new sports utility EV, will be officially unveiled next month, with deliveries starting in October. Gu stated that the business anticipates that monthly deliveries of the G9 will surpass those of its premium P7 sedan in 2019. 6,397 P7 automobiles were delivered by XPeng in July.
XPeng Motors also plans to introduce two new electric vehicles next year, one will be marketed as a B-class and the other as a C-class vehicle. The B-class vehicle is expected to compete with the Tesla Model Y, which suggests that it will be an SUV.
“We do think there is a strong chance and strong confidence that we are going to a growth cycle, led by our new product launches,” Gu stated.
The next C-class car from the firm will also not be a sedan and will compete in the same market as the current G9 SUV. Gu told CNBC that although it will compete in the same class, its model lineup will be “minimally cannibalized.”
“Given the premium and large format positioning, the number may be limited in terms of contribution,” Gu described the C-class model. “But again, it’s still going to be targeting a brand-new segment that we did not cover before.”
Additionally, the recently released XPeng P5 marks a key period in the company’s history. The car already started selling in Nordic states and the Netherlands.
Just eight months after producing 100,000 vehicles, one of the most consistent Chinese electric vehicle startups announced in June that it has produced its 200,000th vehicle. This achievement took nearly three years after the company first started its production in late 2018.
Summary
XPeng shares are down in August after the company issued much lower-than-expected guidance for vehicle delivery in this quarter.
