XPeng Earnings Beat Expectations. Its Stock Is Dropping.


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A Xpeng P7 car is seen during the 19th Shanghai International Automobile Industry Exhibition in Shanghai on April 19, 2021.


Hector Retamal/AFP via Getty Images

 

XPeng

stock was rising in early trading Thursday, after dropping in premarket trading. The Chinese electric car maker reported better than expected second quarter numbers.

XPeng (ticker: XPEV) shares were initially down about 1.9% in premarket trading Thursday. Shares are now up about 2.5% in early trading. The

S&P 500

is down about 0.1%. The

Dow Jones Industrial Average

has gained about 0.2%.

The moves are actually small for XPeng considering how much its stock usually moves after earnings. Shares have moved about 13%, up or down, on average following the past four quarterly earnings reports.

XPeng reported a per shares loss of 21 cents from $583 million in sales. Analysts were looking for 22 cent loss from $552 million in sales.

The company delivered 17,398 vehicles during the second quarter. Gross profit margins—an important metric for a new company not yet making bottom line profits—came in at 11.9%. Analysts projected 11.3% for the second quarter.

Citigroup analyst Jeff Chung called the results impressive and the outlook conservative in a Thursday report, reacting to the earnings report.

Looking ahead, XPeng expects to deliver about 22,000 vehicles in the third quarter and generate sales of about $756 million, better than the $658 million analysts are projecting. XPeng is making cars out of one plant which is operating near its capacity. The company is planning to double capacity at that plant by early 2022.

Chung rates XPeng stock Buy and as a $53.40 target price for shares.

The company feels good about results too. “Our outstanding second quarter 2021 results reflect XPeng’s leadership in China’s booming Smart EV industry where we continue to introduce innovative technology, differentiated products and premium services,” said President Dr. Hongdi Brian Gu in the company’s news release.

It looks like a solid quarter. Still, XPeng stock is down about 2% year to date. Rising interest rates—which hurt richly value high growth companies more than others—as well as a semiconductor shortage constraining global auto production and a selloff in Chinese stocks has hurt shares in 2021. Still, the stock has gained recently, rising more than 30% over the past three months.

Write to allen.root@dowjones.com

Harry Byrne

Harry Byrne

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