XPeng Stock Dips After Earnings. It Has a Demand Problem.

Text size

Chinese electric-vehicle maker

XPeng

‘s first-quarter sales fell short of Wall Street estimates. Shares are falling in early trading. XPeng’s second-quarter outlook isn’t great, either. The big issue: demand.

Wednesday morning, XPeng (ticker: XPEV) reported an adjusted per-share loss of 19 cents. Wall Street was looking for a 28-cent loss. Earnings were better than expected, but sales were worse. First-quarter sales came in at just under $500 million, down about 46% compared with the year-ago period. Wall Street was looking for sales of about $700 million.

Automotive gross profit margin was negative 2.5% for the first quarter, down from positive 5.7% in the fourth quarter of 2022 and positive 10.4% for the first quarter of 2021.

Falling deliveries is one reason vehicle margins are down. XPeng delivered 18,230 vehicles in the first quarter of 2023, compared with 22,204 in the fourth quarter and 34,561 in the first quarter of 2022.

Looking ahead, XPeng expects to deliver 21,000 to 22,000 vehicles in the second quarter. April deliveries were 7,079 units. That leaves about 7,200 units per month in May and June.

XPeng delivered 34,422 units in the second quarter of 2022. XPeng’s best month of deliveries was 16,000 units in December 2021.

Flat sequential deliveries isn’t what investors wanted or analysts expected. XPeng projects second-quarter sales of about $700 million. Wall Street is currently projecting just under $1 billion. XPeng generated $1.1 billion sales in the second quarter of 2022. The company isn’t growing anymore.

That’s a problem for a growth stock. XPeng’s U.S.-listed American depositary receipts are down 61% over the past 12 months and were down 11% in early trading Wednesday, at $8.07, while the

S&P 500
and

Nasdaq Composite
were both down 0.7%.

Coming into Wednesday trading, XPeng ADRs were down about 88% from their record high of $74.49 reached in November 2020.

Shares of peer

NIO

(NIO) were down 11% in recent trading.

Li Auto

(LI) ADRs were up 2.2%. Shares of

Tesla

(TSLA), the largest EV maker in the world, were off 3.6%. ADRs of

BYD

(BYDDY), the largest EV maker in China, were down 0.7%.

XPeng’s sales issue isn’t industrywide. Battery electric sales through April in China have come in at about 1.5 million units, up roughly 30% year over year, including domestic and export sales.

XPeng needs to reverse recent trends. “Going forward, our top priority remains to accelerate growth in sales and market share,” said President Hongdi Brian Gu in a news release. “As the upcoming G6 launch and other new product launches fuel rapid sales growth, we expect our cash flow from operations to improve significantly.”

Investors hope he’s right.

Write to Al Root at [email protected]