Xpeng Q3: Huge loss doesn't matter? It's all about sales!

$XPeng Inc.(XPEV)$ $XPENG-W(09868)$ has just released its third quarter report, revealing a slight miss on revenue expectations and a record-breaking loss, causing its pre-market stock price to plummet by nearly 4%.

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Specifically, Xpeng's revenue in the third quarter was 8.53 billion yuan, an increase of 25% year-on-year, but slightly less than the 8.58 billion yuan expected by analysts:

Revenue growth is within market expectations, because Xpeng announces sales every month, although less than market expectations, but the range is not large. Therefore, the revenue end of the third quarter was still satisfactory.

However, what truly astonished the market was the whopping loss of 3.89 billion yuan incurred during the third quarter, which shattered previous records.

The reason for huge loss was mainly attributed to negative gross profit margins in automobile sales, which stood at -6.1% during the third quarter, falling short of analyst predictions.

On the expenditure side, with the increase in automobile sales and overall revenue scale elevation, Xpeng tightly controlled various investments under the principle of cost reduction and efficiency enhancement. R&D investment in the third quarter showed negative growth, while Sales and administrative expenses slightly increased, which could almost be neglected.

As a result, Xpeng's expenditure rate significantly decreased in the third quarter, indicating that profit margins are expected to improve as automobile sales rise.

Despite the massive loss incurred in the third quarter, the key focus for Xpeng lies in its sales performance. Management forecasts fourth quarter sales to range between 59,500 and 63,500 units, exceeding analyst expectations of 56,150 units.

However, considering that only 20,002 units were delivered in October, calculations based on the midpoint of guidance suggest an average monthly sales volume of approximately 20,749 units for November and December, indicating a slowdown in sequential growth.

Looking ahead, Xpeng must introduce more popular models to reverse the situation of huge loss, which is a great challenge to the management ability in the fiercely competitive new energy vehicle industry. Investors must pay close attention to monthly and even weekly sales data, which are more critical than financial reports.