Shares of Xpeng (NYSE:XPEV) stock are down 10% today after the Chinese electric vehicle (EV) manufacturer reported a wider-than-expected loss for the second quarter.
Xpeng blamed the disappointing Q2 results on ongoing Covid-19 lockdowns in China — where the company has its manufacturing base — as well as softening consumer demand in the face of high inflation and rising interest rates. Despite the poor earnings, however, the company also reported a big jump in its EV deliveries for July.
Year-to-date (YTD), XPEV stock is down about 60%, trading close to $19 per share. Here’s what investors should know moving forward.
What’s Happening With XPEV Stock?
For Q2, Xpeng reported a net loss of 46 cents per share, worse than the loss of 32 cents Wall Street analysts had expected. However, the Chinese EV maker also reported an 87% sales increase to $1.1 billion in Q2. That outpaced expected sales growth of 85% to $1 billion, according to data from FactSet.
Xpeng also did well for Q2 deliveries, which grew 98% to 34,422 vehicles. The company’s July sales of 11,524 vehicles increased 43% year-over-year (YOY) and surpassed rivals like Li Auto (NASDAQ:LI) and Nio (NYSE:NIO). So far, deliveries for the year are up 108% to 80,507 vehicles.
Xpeng currently sells a total of three EVs, with the new G9 electric sedan due in showrooms before the end of 2022. The company is already taking reservations for the G9 and planning an official launch in September.
Why It Matters
Xpeng’s Q2 earnings show a couple of things. First, the worse-than-expected loss demonstrates the toll that China’s ongoing Covid-19 lockdowns have taken on its manufacturing sector. China is reportedly in the midst of its worst Covid-19 outbreak since March 2020.
Secondly, Xpeng’s deliveries indicate that the company is separating itself from its main Chinese rivals. The deliveries also indicate that the company has been able to ramp up production despite ongoing domestic issues. CEO He Xiaopeng said the following amid the Q2 results:
“Our deliveries sustained robust growth momentum in the second quarter despite unprecedented circumstances brought by the resurgence of COVID-19 in certain areas of China.”
Looking ahead, Xpeng forecasts vehicle deliveries between 29,000 and 31,000 for the third quarter, representing double-digit YOY increases. The company expects Q3 revenue between $1 billion and $1.1 billion as well.
What’s Next
XPEV stock is down significantly on news of the earnings miss. Today’s loss compounds the downturn in its shares, which has been ongoing since the start of the year. XPEV now trades near its 2020 initial public offering (IPO) price. However, investors and analysts shouldn’t ignore the fact that the company’s EV deliveries are through the roof, besting competitors.
On the date of publication, Joel Baglole did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
