XPeng’s Delivery Forecast Missed Estimates. The Stock Is Up Anyway.

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Investors in XPeng are acting as if they expected mixed earnings news from the Chinese electric-vehicle maker.

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Its fourth-quarter results, released Monday morning, showed higher sales and earnings than Wall Street had anticipated, but its guidance for delivery of vehicles for the first quarter was on the low side.

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The stock (ticker: XPEV) was up about 5.7% in premarket trading. Futures on the S&P 500 and Dow Jones Industrial Average were just about flat.

reported an 11-cent-per-share loss from more than $1.34 billion in sales. Wall Street had penciled in a 19-cent loss from just under $1.28 billion in sales.

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Gross profit margins came in at about 12%, down from 14.4% reported in the third quarter of 2021, Rising costs and supply-chain problems, such as a lack of semiconductors, are two reasons margins dropped.

Overall, the results look a little better than expected, but XPeng also said it expects to deliver about 33,750 vehicles in the first quarter. That implies deliveries of 14,000 to 15,000 vehicles in March. XPeng delivered about 19,100 vehicles in the first two months of 2022.

Wall Street’s first-quarter estimates implied closer to 19,000 vehicles for March, but based on XPeng’s stock-price reaction, investors weren’t counting on that number.

The stock might have risen after the report because prior to it, the shares had been badly beaten up. Coming into Monday trading, shares were down about 46% year to date.

Rising interest rates and inflation have made investors less willing to hold richly valued high-growth stocks, but that isn’t the whole story. Stock in EV leader Tesla (TSLA), after all, is only down about 4% year to date.

Longstanding fear about US delisting of Chinese stocks is another issue. Concern intensified again earlier in March after the Securities and Exchange Commission identified five US-listed Chinese firms that didn’t meet US auditing requirements. None were Chinese EV makers.

Falling deliveries at XPeng, Li Auto (LI), and NIO (NIO) have also dented investor sentiment. EV deliveries hit records in China at the end of 2021, just before purchase incentives were cut. Combined deliveries came in around 20,000 units for February, down from more than 40,000 reported in December, although February includes the Lunar New Year holiday, which makes the monthly figures less comparable.

XPeng management scheduled a conference call for 8 am Eastern time to discuss the results. Analysts and investors will be eager to hear about Chinese EV demand as well as how the company can manage rising costs over the coming year.

The shares rose initially, but investors should brace for volatility. Options markets implied the stock would move 10%, up or down, after the earnings were reported. That is more volatile than trading following recent reports. Shares have moved an average of roughly 4%, up or down, following the past four quarterly reports, with three losses and one gain.

NIO reported earnings on Thursday evening. Its forecast for first-quarter deliveries missed Wall Street’s expectations, triggering a 9.4% fall in the stock in Friday trading. That result may have helped manage investors’ expectations about XPeng’s quarter, however. The shares dropped 7.6% in response to NIO’s news.

Write to Al Root at [email protected]


Credit: www.marketwatch.com /

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