Al Root
Shares of the Chinese electric vehicle maker XPeng rose, but not for long, after the company posted better-than-expected fourth-quarter earnings.
The stock was lower in morning trading. Investors wanted to hear better news about EV pricing from company management.
Initially, the results offered relief for investors worried about recent EV trends. Even Tesla stock rose, while the market headed in the other direction.
The company reported an operating loss of $289 million from sales of just more than $1.8 billion. So far, so good. Wall Street was looking for a loss of $448 million from sales of just under $1.8 billion.
The company delivered 60,158 vehicles in the quarter, up from 22,204 in the fourth quarter of 2022, but competition over prices pushed down its profit margins. XPeng's fourth-quarter gross profit margin was 6.2%, down 2.5 percentage points year over year.
Looking ahead, XPeng expects to deliver between 21,000 and 22.500 vehicles in the first quarter. The company delivered 12,795 vehicles in the first two months of the year, leaving about 9,000 vehicles for March. That is roughly double the volume for February, which included the 2023 Lunar New Year holiday. The total was up from the roughly 7,000 vehicles delivered in March 2023.
That news about growth seems to have lifted XPeng's U.S.-listed shares by more than 3% in premarket trading, but shares reversed and were down about 3.7% at $9.46 by late morning. The S&P 500 and Nasdaq Composite were down 0.2% and 0.6%, respectively.
News about pricing appears to deserve most of the blame for the reversal. "Since the first quarter of the year, there has been an industrywide price war that has been growing increasingly fierce," said a company representative on XPeng's earnings conference call.
Weak pricing led the company to invest more heavily in efficiency, technology, sales, and other areas. "We accelerated our global expansion...we are long-term oriented," the representative said.
All the steps sound sensible, but what investors want is for EV prices to rise.
XPeng's pricing comments hit other EV makers' stocks. Shares of NIO and Li Auto were down 7% and 2.1%, respectively. Tesla stock was up slightly in early trading but fell 1.7% by mid morning. Shares of BYD dropped 1.4% in overseas trading.
All five stocks have declined this year by an average of about 24%. Investors have been worried about demand growth and profit margins given declines in prices for EVs.
Write to Al Root at allen.root@dowjones.com
This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.
(END) Dow Jones Newswires
March 19, 2024 11:26 ET (15:26 GMT)
Copyright (c) 2024 Dow Jones & Company, Inc.