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XPeng (XPEV) Gains 7.2% Since Q2 Earnings and Sales Miss
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XPeng Inc. (XPEV - Free Report) incurred a loss per American Depositary Share (ADS) of 45 cents in the second quarter of 2023, wider than the Zacks Consensus Estimate of a loss of 29 cents per share. The loss, however, narrowed from 47 cents per share incurred in the year-ago period. This China-based electric vehicle (EV) maker posted revenues of $698.2 million, down 32% year over year. Revenues lagged the consensus mark of $793 million. The company stated that its business was affected by factors including inventory write-downs, heightened sales promotions and the conclusion of Chinese EV subsidies.
Shares Rise Despite Weaker-Than-Expected Results
Despite the miss, shares of XPeng have moved up more than 7% since it reported quarterly results on Aug 18. This can be attributed to a substantial increase in the projection of deliveries for the third quarter, driven by its new G6 model, which features semi-autonomous driving capabilities.
XPeng's G6, the inaugural model on the SEPA 2.0 architecture, swiftly achieved bestseller status after its June launch, according to CEO He Xiaopeng. This marks a significant advancement in commercializing the in-house full-stack EV platform and smart technologies. G6 aims to reduce development cycles by a fifth.
Alongside NIO and Li Auto, XPeng is seen as a leading challenger to Tesla (TSLA - Free Report) in China, crafting premium electric cars with preliminary autonomous tech and intelligent cockpits. G6's limited autonomous capabilities utilizing XPeng's X Navigation Guided Pilot (NGP) software enabled the company to garner 35,000 orders a month after presales began.XPEV’s NGP is similar to Tesla's Full Self-Driving system. Notably, XPeng has priced its basic G6 edition at 20% less than Tesla's Model Y entry-level version.
Ming Hsun Lee, an analyst at BofA Securities, raised his rating on XPeng shares from Hold to Buy on Monday, accompanied by a price target increase to $22 per share from $16.30. Lee's optimism stemmed from the $700 million investment by Volkswagen (VWAGY - Free Report) , declared in July, which would bolster XPeng's financial position and validate its technological prowess. Lee anticipates that the increased funding and collaborative product development with Volkswagen will enable XPeng to generate profits and positive free cash flow by 2025.
This investment comes at a crucial juncture when the automotive industry is rapidly transitioning toward electric mobility. With Volkswagen's backing, XPeng is better positioned to compete on a global scale and contribute to the transformation of the automotive sector. It also serves as a testament to the attractiveness of XPeng’s innovations in the eyes of established industry players, underscoring the company's potential to reshape the future of transportation.
XPEV delivered 23,205 vehicles in the second quarter, up 27.3% sequentially but down 32.6% on a yearly basis. The revenues generated from vehicle sales amounted to $610.2 million, contracting 36.2% year over year. Reduced vehicle deliveries and the discontinuation of subsidies for new energy vehicles led to the decline. Other sales amounted to $88 million, up 28.2% on the back of increased sales of parts and services.
Cost of sales fell 20.6% to $725.4 million. The gross margin in the reported quarter was negative 3.9% compared with 10.9% in the year-ago period. The vehicle margin came in at negative 8.6% in the quarter under review, compared with 9.1% recorded in the corresponding quarter of 2022. The decline was driven by two key factors. Firstly, there were inventory write-downs and losses on inventory purchase commitments linked to the G3i model. Secondly, elevated sales promotions and the expiry of new energy vehicle subsidies contributed to the decrease in margins.
The research & development costs were $0.19 billion, up 8.1% year over year. The upswing can be attributed to increased spending associated with the creation of new vehicle models in the company’s efforts to broaden its product lineup. Selling, general & administrative expenses decreased 7.3% year over year to $0.21 billion amid the reduction in commissions paid to franchised stores and a decrease in marketing and advertising expenses.
Cash/cash equivalents, restricted cash, short-term investments and time deposits totaled $4.65 billion as of Jun 30, 2023. The long-term borrowings were roughly $743 million as of the same date.
For the third quarter, XPeng expects deliveries in the band of 39,000-41,000 vehicles, signaling a year-over-year increase of 31.9-38.7%. Revenues are envisioned between RMB 8.5 and RMB 9 billion, indicating a year-over-year rise of 24.6-31.9%.
XPeng Inc. Sponsored ADR Price, Consensus and EPS Surprise
Image: Bigstock
XPeng (XPEV) Gains 7.2% Since Q2 Earnings and Sales Miss
XPeng Inc. (XPEV - Free Report) incurred a loss per American Depositary Share (ADS) of 45 cents in the second quarter of 2023, wider than the Zacks Consensus Estimate of a loss of 29 cents per share. The loss, however, narrowed from 47 cents per share incurred in the year-ago period. This China-based electric vehicle (EV) maker posted revenues of $698.2 million, down 32% year over year. Revenues lagged the consensus mark of $793 million. The company stated that its business was affected by factors including inventory write-downs, heightened sales promotions and the conclusion of Chinese EV subsidies.
Shares Rise Despite Weaker-Than-Expected Results
Despite the miss, shares of XPeng have moved up more than 7% since it reported quarterly results on Aug 18. This can be attributed to a substantial increase in the projection of deliveries for the third quarter, driven by its new G6 model, which features semi-autonomous driving capabilities.
XPeng's G6, the inaugural model on the SEPA 2.0 architecture, swiftly achieved bestseller status after its June launch, according to CEO He Xiaopeng. This marks a significant advancement in commercializing the in-house full-stack EV platform and smart technologies. G6 aims to reduce development cycles by a fifth.
Alongside NIO and Li Auto, XPeng is seen as a leading challenger to Tesla (TSLA - Free Report) in China, crafting premium electric cars with preliminary autonomous tech and intelligent cockpits. G6's limited autonomous capabilities utilizing XPeng's X Navigation Guided Pilot (NGP) software enabled the company to garner 35,000 orders a month after presales began.XPEV’s NGP is similar to Tesla's Full Self-Driving system. Notably, XPeng has priced its basic G6 edition at 20% less than Tesla's Model Y entry-level version.
Ming Hsun Lee, an analyst at BofA Securities, raised his rating on XPeng shares from Hold to Buy on Monday, accompanied by a price target increase to $22 per share from $16.30. Lee's optimism stemmed from the $700 million investment by Volkswagen (VWAGY - Free Report) , declared in July, which would bolster XPeng's financial position and validate its technological prowess. Lee anticipates that the increased funding and collaborative product development with Volkswagen will enable XPeng to generate profits and positive free cash flow by 2025.
This investment comes at a crucial juncture when the automotive industry is rapidly transitioning toward electric mobility. With Volkswagen's backing, XPeng is better positioned to compete on a global scale and contribute to the transformation of the automotive sector. It also serves as a testament to the attractiveness of XPeng’s innovations in the eyes of established industry players, underscoring the company's potential to reshape the future of transportation.
XPeng currently carries a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks Rank #1 (Strong Buy) stocks here.
Quarter Highlights
XPEV delivered 23,205 vehicles in the second quarter, up 27.3% sequentially but down 32.6% on a yearly basis. The revenues generated from vehicle sales amounted to $610.2 million, contracting 36.2% year over year. Reduced vehicle deliveries and the discontinuation of subsidies for new energy vehicles led to the decline. Other sales amounted to $88 million, up 28.2% on the back of increased sales of parts and services.
Cost of sales fell 20.6% to $725.4 million. The gross margin in the reported quarter was negative 3.9% compared with 10.9% in the year-ago period. The vehicle margin came in at negative 8.6% in the quarter under review, compared with 9.1% recorded in the corresponding quarter of 2022. The decline was driven by two key factors. Firstly, there were inventory write-downs and losses on inventory purchase commitments linked to the G3i model. Secondly, elevated sales promotions and the expiry of new energy vehicle subsidies contributed to the decrease in margins.
The research & development costs were $0.19 billion, up 8.1% year over year. The upswing can be attributed to increased spending associated with the creation of new vehicle models in the company’s efforts to broaden its product lineup. Selling, general & administrative expenses decreased 7.3% year over year to $0.21 billion amid the reduction in commissions paid to franchised stores and a decrease in marketing and advertising expenses.
Cash/cash equivalents, restricted cash, short-term investments and time deposits totaled $4.65 billion as of Jun 30, 2023. The long-term borrowings were roughly $743 million as of the same date.
For the third quarter, XPeng expects deliveries in the band of 39,000-41,000 vehicles, signaling a year-over-year increase of 31.9-38.7%. Revenues are envisioned between RMB 8.5 and RMB 9 billion, indicating a year-over-year rise of 24.6-31.9%.
XPeng Inc. Sponsored ADR Price, Consensus and EPS Surprise
XPeng Inc. Sponsored ADR price-consensus-eps-surprise-chart | XPeng Inc. Sponsored ADR Quote