XPeng offered a solid EV delivery outlook Friday after posting a wider-than-expected loss for the second quarter. XPeng stock tumbled Friday but rebounded Monday.
On Monday, Bank of America analyst Ming Hsun Lee upgraded XPeng to buy from neutral, with a price target of $22, up from $16.30. Lee cited the recent Volkswagen deal and now expects the EV startup to turn a profit in 2025 vs. a net loss in his previous forecast.
XPeng Earnings
Estimates: Analysts expected XPeng to narrow losses to 29 cents per share from a net loss of 46 cents a year ago. Revenue was seen falling 36%, year over year, to $692.6 million, according to FactSet.
Results: XPeng lost 43 cents a share on revenue of $698.2 million.
Gross margin was negative 3.9%, vs. 10.9% for the year-ago quarter and 1.7% in the prior quarter.
For Q2, XPeng previously reported deliveries of 23,205 electric vehicles. Its Q2 EV sales rose from Q1 on the back of new models, but they fell vs. a year ago.
Outlook: XPeng sees Q3 deliveries of 39,000-41,000. Analysts at Deutsche Bank had forecast XPeng to guide Q3 deliveries of roughly 40,000 electric vehicles.
The new G6 SUV "has quickly become one of the bestselling models following its official launch in June, turbocharging our sales growth momentum," the company said in Friday's earnings release.
Deliveries of the G6, a Model Y rival, began in July. It is much cheaper than Tesla's base Model Y, which did not see price cuts this week.
The startup forecast revenue of RMB 8.5 billion-RMB 9 billion ($1.17 billion-$1.23 billion). That would be a year-over-year gain of roughly 25%-32% in local currency.
Analysts on Wall Street anticipated Q3 revenue of $1.326 billion, up 39% year over year, FactSet shows.
XPeng Stock
Shares of XPeng soared 9.7% to 16.43 in Monday's stock market action but pared gains, following Friday's 4.3% slide. XPEV stock briefly regained the 21-day exponential moving average intraday, while further rebounding from the 50-day line.
XPeng stock cleared resistance around 12 in late June and had almost doubled by late July. It has since pulled back to the 50-day line and shows no buy point for now.
Startup peers Nio and Li Auto rose more than 2% each Monday. Chinese EV giant BYD edged up while Volkswagen fell. Tesla jumped 7.3% after six down days.
EV Partnership, China Slowdown
The XPeng earnings report landed on Friday after a big win for the money-losing startup.
In late July, XPeng and German giant Volkswagen announced a partnership to produce VW-branded electric vehicles using key XPeng technologies and platforms.
Both are trying to challenge Tesla in China. Tesla again stoked the China EV price war this week, with price cuts, discounts and incentives across most of its lineup.
The price war comes amid signs of stress in the Chinese economy.
The economy weakened broadly in July, across property investment, retail sales and industrial output, official data showed Tuesday. Then China's central bank cut a key interest rate to stimulate growth.
On Thursday, China property giant Evergrande filed for bankruptcy in New York, fueling fresh concerns.
However, XPeng stock has rebounded with recovering EV sales, with shares up more than 65% year to date.
