XPeng Shares Soar 45%

XPeng, a Chinese electric carmaker, reported a larger-than-anticipated loss and its revenue did not meet expectations due to supply chain problems, increased competition, and a difficult macroeconomic climate.

Xpeng's stock rose 45% in the U.S. after the company suggested that its declining shipments could be coming to an end.

In the third quarter of 2022, the results were compared to Refinitiv consensus estimates.

XPeng reported that in the third quarter, they shipped 29,570 electric vehicles, a 15% increase from the same period in the previous year. Unfortunately, this was a 14% decrease from the second quarter of 2020.

In October, XPeng delivered 5,101 vehicles, a significant decrease from the 8,468 vehicles delivered in September. Brian Gu, president of XPeng, stated in an interview with CNBC on Wednesday that November deliveries would be below 6,000 units, but the company is anticipating them to rebound to 10,000 in December.

Bill Russo, the Chief Executive Officer of Automobility, based in Shanghai, suggested that the surge in the share price could be attributed to the markets punishing Xpeng, and that this could be seen as the lowest point and the bad news being left in the past.

XPeng, a company based in Guangzhou, has had to confront a number of difficulties in the past few months, such as the extensive lockdowns in China due to the Covid-19 pandemic. As with other car manufacturers, XPeng has had to grapple with increasing material costs, which led to an increase in the cost of their vehicles earlier this year.

At the same time, XPeng has had to contend with increased rivalry from companies such as BYD and Tesla.

The company anticipates shipping between 20,000 and 21,000 vehicles in the fourth quarter, which is a significant year-over-year decline of 49.7% to 52.1%.

Gu stated that the outlook was based on a variety of elements. He mentioned that the G9 SUV, which was released in September, encountered essential component shortages, which prevented the company from increasing production as they had anticipated and caused them to postpone shipments to customers.

XPeng's executive noted that the business is facing stringent limitations due to the Covid-19 restrictions in place across China.

XPeng's CEO, Gu, has noted that the company is going through a "new product replacement cycle," which has caused a decrease in sales of older products that have not been updated or changed in over a year.

Shares of XPeng have taken a significant hit in 2020, with the stock price dropping by 85%. This is due to a combination of factors, including a slowdown in the Chinese economy and an increase in global interest rates, which has caused investors to shy away from Chinese growth stocks.

This week, Jefferies reduced its target price for XPeng's stock from $18.6 to $4.20, which is a significant decrease. Other analysts have also lowered their target share price for the company.

Bernstein analysts have determined that Tesla's stock valuation is more reasonable, but they still do not recommend buying it.

According to Morgan Stanley, a shift in Twitter sentiment is necessary to prevent Tesla's market value from dropping to $500 billion.

On Monday, an investment firm released a statement indicating that XPeng had experienced a decline in market share due to missteps in product and pricing strategy, as well as a lack of enthusiasm for its new G9 SUV.

Jefferies noted that the cost of XPeng's top-of-the-line P7 sedan is more expensive than some of its rivals, while Tesla's Model 3 is priced competitively.

XPeng has been increasing the cost of its vehicles, while some of its rivals have been reducing their prices.

Xpeng's Gu commented that the company had been feeling the pressure of competition due to the lower prices of products from rivals such as BYD and Tesla. He also admitted that they had been too confident in their pricing strategy.

He declared that pricing would be taken into account when XPeng releases three new models in 2023. However, he stated that the company is unlikely to reduce the cost of any of its current models such as the P7 and P5 sedans. Instead, XPeng will provide "incentives" to customers to purchase vehicles in an effort to regain some of the market share that was lost, according to Gu.

XPeng has been undergoing a transformation, with founder He Xiaopeng taking a more direct role in the company's leadership. Gu also mentioned that XPeng will be cutting back on spending in areas that are not essential to their core operations.

The company has already established its production and design systems, so the majority of the research and development expenses have been completed.

Gu stated that due to the investments already made, there is very little capital expenditure that needs to be put into the project, allowing them to become more focused and efficient.

He emphasized the need to be more concentrated and efficient, and to concentrate on the areas where we have a lasting edge.

Gu stated that the consequences of the reorganization are expected to be visible in the latter half of 2023 when the business regains "the size and profitability trajectory that we are content with."

The president of XPeng stated that the firm is still aiming to achieve positive free cash flow by the year 2024.