The Chinese manufacturer of electric vehicles, Xpeng, disclosed a wider-than-expected loss for the second quarter and lukewarm delivery expectations on Wednesday, which sent its Hong Kong-listed shares plummeting more than 12%.
Tuesday saw Xpeng disclose a net loss of 2.7 billion Chinese yuan ($403.2 million), which was higher than the 1.6 billion yuan consensus estimate from Refinitiv.
The business, which has its headquarters in Guangzhou, China, also stated that it anticipates delivering between 29,000 and 31,000 electric vehicles in the third quarter, indicating an increase of between 13% to 20.8% year over year.
The market was let down by that guidance.
“Well the second quarter results were actually not bad at all. The revenue was even a little bit better than what we expected. And the earnings, or I should say loss, were narrower than what we expected,” Jiong Shao, a Barclays analyst, said on Wednesday’s episode of “Street Signs Asia” on CNBC.
“The problem … was really the forward Q3 delivery guidance, which is about 40% below prior estimates we had. That’s what happened to the stock price.”
The recommendation, according to Xpeng President Brian Gu, takes into account that the industry is approaching a “pretty quiet season” and that “traffic in the stores are fewer than what we’ve experienced before because (of the) post-COVID circumstances,” he said on Tuesday.
In the second quarter of the year, China saw a revival of Covid-19. Major cities nationwide, including Shanghai, a center of global finance, were shut down as a result of the authorities’ response.
New designs to fuel growth
The G9, Xpeng’s new electric sports utility vehicle, is expected to be on sale in October, according to the company. Its official debut is scheduled for next month.
Gu stated that the business anticipates that G9 deliveries would surpass those of its premium P7 sedan by the end of the current year. Xpeng delivered 6,397 P7 vehicles in July.
In 2023, Xpeng also intends to introduce two additional models.
Gu claimed that Xpeng should expand as a result of the new vehicles, the beginning of G9 deliveries, seasonal strength in the fourth quarter, and other factors.
“So we do think there is a strong chance and strong confidence that we are going to a growth cycle, led by our new product launches,” Gu said.