Chinese electric vehicle maker Xpeng looks to have passed a key test. The company reported solid third-quarter results that, right now, look good enough for investors.
The stock is jumping in premarket trading. Whether that remains the case throughout the trading day is anyone’s guess. The stock has been on fire and whether investors will see the earnings news as a reason to take profits or double down on the highflying shares is unclear
Xpeng (ticker: XPEV) stock was up 123% from the August $15 IPO price, as of Wednesday’s close. Shares are up 69% over the past month. Stock in Tesla (TSLA), the EV behemoth, for comparison, is down almost 6% over the past month.
Shares of Xpeng—along with shares of its Chinese EV peers NIO (NIO) and Li Auto (LI)—have been on a tear. Xpeng stock is up 9% in premarket trading.
The company reported a 16 cent per-share loss from $293 million in sales. Analysts had projected a 18 cent per-share loss from $284 million in sales, so results were a little better than expected.
“In our first quarter as a public company we achieved strong operating and financial results, highlighted by the rapid growth in deliveries of our P7 Smart EV,” said CEO He Xiaopeng in the company’s news release.
Xpeng is still a new, smaller company. Gross profit margins in the quarter were just 4.6%. Tesla, the largest EV maker, reported $8.8 billion in sales and 23.5% gross margins in its third quarter, reported in October.
No one, however, expects bottom line profits or big margins yet. In fact, this is the first quarter of positive automotive gross profits. Options markets implied a 15% to 20% stock move, up or down, following earnings. Shares are up now, but investors should expect volatile trading throughout the training day.
The company expects to deliver 10,000 vehicles and generate about $333 million in sales in the fourth quarter. Sales looks a little lower than analyst had expected, but Xpeng stock is new. The analyst “consensus” amounts to only a couple of estimates.
Xpeng hosts an earnings conference call at 8 a.m. Eastern time. Investors and analysts will want to hear more about growth, new product launches and the health of the overall car market in China.
Xpeng’s results are helping its Chinese peers. NIO stock is up 2.7% in premarket trading. Li Auto stock has jumped about 6%. Dow Jones Industrial Average and S&P 500 futures are down 0.6% and 0.3%, respectively.
Write to Al Root at allen.root@dowjones.com
Xpeng’s Earnings Are Lifting the Stock. NIO and Li Auto Rise Too. - Barron's
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