XPeng's stock jumps as margin improvement helps fuel earnings beat

MW XPeng's stock jumps as margin improvement helps fuel earnings beat

By Tomi Kilgore

Margins turned positive in the fourth quarter as cost cuts 'bear fruit'

Shares of XPeng Inc. surged Tuesday, after the China-based electric-vehicle maker reported fourth-quarter results that were well above expectations, as cost cuts helped fuel a swing to positive gross margin.

And while the company continues to face some short-term challenges, as EV demand continues to be an issue in China, Chief Executive Xiaopeng He said XPeng is about to embark on a "major product cycle," with plans to launch more than 10 new models over the next three years.

"We will continue to lead the innovation of autonomous driving technology, making it affordable and accessible to a much broader customer base," He said. "We will also make market entry into more international markets."

The stock $(XPEV)$ jumped 3.7% in premarket trading.

Net losses for the quarter to Dec. 31 narrowed to RMB1.57 billion ($221.2 million), or RMB1.51 per American depositary share, from RMB2.68 billion, or RMB2.74 per ADS, in the same period a year ago.

Excluding nonrecurring items, adjusted per-ADS losses of RMB 1.98 were much less than the FactSet loss consensus of RMB2.97.

Revenue grew 154% to RMB13.05 billion ($1.84 billion), to beat the FactSet consensus of RMB12.64 billion, as vehicle sales increased 162% to RMB12.23 billion and services and other revenue rose 71.6% to RMB822.1 million.

Gross margin for the quarter was 6.2%, down from 8.7% a year ago, but a sharp improvement from negative 2.7% in the third quarter.

"Our plans on cost reduction through technology and engineering as well as operational improvement have begun to bear fruit," He said.

Total deliveries for the quarter, as previously reported, totaled 60,158 EVs, compared with 22,204 deliveries a year ago.

Looking ahead, the company expects first-quarter deliveries of between 21,000 and 22,500, up from deliveries of 18,230 last year.

Revenue is expected to be between RMB5.8 billion and RMB6.2 billion, up from RMB4.03 billion last year, but below the current FactSet consensus of RMB10.69 billion.

The stock has tumbled 32.7% year-to-date through Monday, while the iShares MSCI China ETF MCHI has slipped 1.1% and the S&P 500 index SPX has gained 8%.

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-Tomi Kilgore

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March 19, 2024 06:57 ET (10:57 GMT)

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