XPeng Stock Drops on Earnings. Chinese EV Demand Remains Strong, Though. — Barrons.com
Nov 19, 202416:16 EST
 VOW-1.10%  TSLA+2.14%  XPEV-3.77%
Al Root
Shares of Chinese electric-vehicle maker XPeng rose early Tuesday but gave up gains rapidly after reporting better-than-expected quarterly results.
Demand was solid in the period and price competition doesn't appear to be getting any worse. That's good news for XPeng and other EV makers.
XPeng on Tuesday announced a third-quarter loss per share of 14 cents from sales of $1.4 billion. Wall Street was looking for a loss of 30 cents a share on sales of $1.4 billion, according to FactSet.
Margins were stronger than expected. Gross-profit margins were 15.3% for the quarter. Analysts were projecting 13.6%.
XPeng delivered 46,533 vehicles in the third quarter, up 16% from the 40,278 delivered in the third quarter of 2023. Vehicle sales grew 12.1% year over year. Revenue growing slower than deliveries has been a theme for Chinese auto makers in 2024 amid stiff competition.
However, total sales grew 18% year over year with service revenue up 91% year over year. Collaboration with Volkswagen helped accelerate growth.
Looking ahead, XPeng expects to ship 87,000 to 91,000 vehicles in the fourth quarter, up about 45% to 51% year over year. Sales are expected to rise about 21%, hitting $2.2 billion, a little better than the $2.1 billion Wall Street projects.
It looked like a solid report. Initially, U.S.-listed XPeng stock was up about 4% in premarket trading. Shares gave up those gains, however, and closed down 3.8% at $12.52 apiece. The S&P 500 added 0.4%. The Dow Jones Industrial Average fell 0.3%.
Citi analyst Jeff Chung called the quarter "in line" but added risks lie ahead. MONA, a low-priced EV, "could dilute blended average selling prices and margin." He rates XPeng stock at Hold with a $14.60 price for the U.S.-listed American depositary receipts.
Coming into Tuesday, XPeng stock has fallen about 11% this year. Lower prices and higher competition have weighed on investor sentiment.
Management hosts a conference call at 8 a.m. Eastern time to discuss results. Analysts and investors will want to hear more about demand, competition, and the outlook for 2025.
Tesla stock rose 2.1%, closing at $346 a share. Strong EV demand in China is good — China accounted for almost 40% of Tesla's third-quarter deliveries — but Tesla's stock has been strong since the Nov. 5 U.S. presidential election, gaining 38% through Tuesday's trading. Monday. Tesla shares added 5.6% on Monday after Bloomberg reported President-elect Donald Trump would seek to set a federal standard to help regulate self-driving cars.
Write to Al Root at allen.root@dowjones.com
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