XPeng's stock tumbled nearly 10% in Hong Kong trading on Tuesday, extending a sharp decline for the Chinese electric-vehicle maker after it issued third-quarter guidance that fell short of Wall Street expectations. The company's US-listed shares had already dropped 9% on Monday, and the stock has now lost more than 45% of its value in both markets this year.
The sell-off was triggered by XPeng's outlook for the third quarter. The company expects revenue of RMB21.7 billion to RMB23.4 billion, significantly below the RMB26.69 billion consensus estimate from FactSet. It also projects deliveries of 115,000 to 121,000 vehicles, implying a midpoint of roughly 118,000 units—a figure that represents sequential growth but only modest year-over-year improvement at best.
Capacity constraints overshadow L03 demand
The weak guidance is particularly notable because XPeng has been counting on its new mass-market L03 model to drive volume growth in the second half of the year. The model has generated strong orders since its July launch, but production is still ramping up. Citi analysts said the delivery outlook was likely affected primarily by supply-chain disruptions to the L03 ramp-up, suggesting the issue is more about manufacturing capacity than consumer demand.
Nomura analysts noted that the revenue guidance implies a relatively stable average selling price of around RMB165,000 per vehicle. They expect a more meaningful recovery in the fourth quarter if XPeng can resolve its capacity bottlenecks. That makes the next few months critical for investors, as a successful production ramp could allow the company to capitalize on L03 demand, while continued constraints could push the recovery further out.
Earnings add to investor concerns
XPeng's second-quarter results provided little relief. The company delivered 103,295 vehicles during the quarter, up 64.8% from the previous quarter but only 0.1% higher than a year earlier. Vehicle-sales revenue rose just 1% year over year to RMB17.05 billion. More concerning was the deterioration in vehicle profitability, with vehicle margin falling to 12.1% from 14.3% a year earlier, although overall gross margin improved. Management attributed the margin pressure partly to a transition between product generations.
The company's net loss widened to RMB1.34 billion from RMB480 million a year earlier, and adjusted loss per American depositary share came in at RMB1.29, versus the RMB0.91 consensus. First-half deliveries totaled about 166,000 vehicles, down 15.8% from a year earlier, meaning XPeng will need a significant acceleration in the second half to meet its annual target.
Analysts turn more cautious
The latest results have prompted several analysts to lower their expectations for the stock. Tiger Securities cut its XPeng price target to $15 from $20 while retaining a Hold rating, citing mixed second-quarter results and the weaker near-term delivery outlook. Macquarie maintained an Outperform rating but lowered its price target to $18, citing lower valuations among peers. The firm reduced its Hong Kong-listed target by 4% and its US ADR target by 5%. Bernstein SocGen Group also cut its price target to $18 from $20 while maintaining a Market Perform rating.
XPeng currently trades at $11.15 in the US. Despite the near-term challenges, Macquarie noted that volume momentum is rebuilding, suggesting the longer-term investment case has not been abandoned. For XPeng, the immediate test is whether it can turn the strong reception for the L03 into actual deliveries. As the company works through its production bottlenecks, investors will be watching closely for signs of a recovery in the fourth quarter.
This article is for informational purposes only and does not constitute financial advice.
