Hong Kong-listed shares of Chinese electric vehicle maker and Tesla rival Xpeng were down more than 12 percent after the automaker reported more losses than was expected for its second-quarter earnings results alongside weak guidance on deliveries.
For the second quarter, the EV maker reported a net loss of 2.7 billion Chinese yuan, or $403.2 million. This was more than the 1.6 billion yuan that analysts had expected, according to Refinitiv.
The EV maker also added that it expects to deliver between 29,000 and 31,000 electric vehicles in the third quarter. Although this represents a year-over-year increase of between 13 percent and 20.8 percent, this was weaker than market expectations.
According to Jiong Shao, an analyst at Barclays, “Well the second quarter results were actually not bad at all. The revenue was even a little bit better than what we expected. And the earnings, or should I say loss, were narrower than what we expected. The problem was really the forward Q3 delivery guidance, which is about 40 percent below prior estimates we had. That’s what happened to the stock price.”
According to the EV maker’s President Brian Gu, the guidance is a reflection of the industry’s journey into a “relatively slow season.” He also added that “traffic in the stores are less than what we’ve seen before because of the post-COVID situation.” China has been dealing with a resurgence in Covid-19. The lockdown aimed at curbing the spread of the disease led to the shut down of major cities including the country’s financial hub – Shanghai.
Brain Gu also added that Xpeng’s new electric sports utility vehicle called the G9 is on track to be launched next month with deliveries to begin in October. He added that the company hopes that monthly deliveries for this new model will surpass its flagship P7 sedan next year. The company also has plans to launch two new models in 2023.
“So we do think there is a strong chance and strong confidence that we are going to a growth cycle, led by our new product launches,” Brain Gu said. The new models along with the commencement of deliveries of the G9 model alongside seasonal growth experienced during the fourth quarter should help the company grow, President Brian Gu explained.