Xpeng's shares were trading 7% lower in pre-market U.S. trade, after the Chinese electric vehicle firm reported a larger than anticipated loss for the second quarter. This deficit of 2.7 billion yuan exceeded the amount registered in the same quarter of 2020, and was the highest quarterly loss the public company has posted since August of 2020. While the profit took a hit, the revenue earned in the period was in line with expectations.
Xpeng on Friday reported a wider-than-anticipated deficit in the second quarter, causing the Chinese electric car maker's shares to drop more than 7% in pre-market U.S. trading. The net loss was higher than the 2.7 billion yuan loss last reported in the second quarter of 2021. It was also the greatest quarterly loss that Xpeng has posted since their public offering in August 2020. In spite of the dip in returns, the Chinese firm's second-quarter revenue was in line with expectations. Here is how Xpeng fared against Refinitiv consensus projections for the second quarter: Net loss: 2.8 billion yuan vs. a 2.13 billion yuan loss anticipated; Revenue: 5.06 billion Chinese yuan ($693.7 million predicted), a 31% year-on-year decline. Xpeng also declared that its gross margin declined to negative 3.9%, compared to positive 10.9% for the same period in 2022. Following a difficult 2022 where its stock price plummeted more than 80%, the company is trying to turn around their operations this year. Xpeng is competing in a feeble Chinese economy with repressed consumer expenditures, while at the same time facing harsh rivalry in China from upstarts such as Nio and Li Auto, and giants BYD and Tesla. As the price battle intensifies in the world's second largest economy, Tesla this week cut the price of its Model Y and Model S cars and offered rebates on current supply of the Model S and Model X in China. Xpeng revealed its vehicle margin was negative 8.6% in the second quarter, compared to positive 9.1% in the same period in 2021. This decrease is attributed to "inventory write-downs and losses on inventory purchase commitments" related to their G3i vehicle, as well as increased sales inducements and the expiration of Chinese electric vehicle subsidies. Hoping to be aided by their most recent car — the G6 Ultra Smart Coupe SUV — which was introduced at the end of the second quarter, Xpeng is attempting to get back on track. "With the G6 and other novel products propelling sales expansion, we anticipate gross margin to steadily recover while operational efficiency continues to develop and free cash flow to considerably improve," Brian Gu, co-president of Xpeng, declared in Friday's earning press release.
Xpeng reported 23,205 cars sold in the second quarter of 2023, a 27% QoQ increase that exceeded its expectations. July alone saw 11,008 vehicles delivered, 28% higher than the previous month, marking the sixth consecutive month of growth. Looking ahead, Xpeng anticipates around 39,000 to 41,000 cars sold in Q3, which would be 31.9-38.7% more year-on-year. Revenue is estimated to be 8.5-9 billion yuan, roughly 24.6-31.9% higher YoY. Restructuring and Volkswagen's recent investment of $700 million have given investors confidence in Xpeng's ability to turn around, hence the stock has gained over 50% this year. The two companies have partnered up to develop electric vehicles for the Chinese market.
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