XPeng's stock soars after EV maker's sales beat by widest margin in 2 years

By Tomi Kilgore

Losses narrow more than expected as gross margin percentage increases more than sevenfold

Shares of XPeng Inc. powered higher Tuesday, after the China-based electric vehicle maker reported first-quarter results that beat expectations by wide margins, fueled by higher deliveries and cost-cutting.

"XPeng took the lead in the mass production and application of [artificial intelligence]-based large models within the China automobile industry," said Chief Executive Xiaopeng He. "We are confident that we can launch competitive models globally in a more efficient manner and thus spearhead the widespread adoption of AI-powered smart cars."

The stock (XPEV) jumped 14% in morning trading, and were up as much as 26.4% earlier in the session.

The company reported first-quarter net losses that narrowed to RMB1.37 billion ($189.45 million), or RMB1.49 per American depositary share, from RMB2.34 billion, or RMB2.57 a share, in the same period a year ago.

The average per-ADS loss estimate of two analysts surveyed by FactSet was RMB2.40.

Gross margin spiked up to 12.9% from 1.7%, helped by cost reductions and an improvement in the mix of models sold.

"Despite fierce market competition, the Company's gross profit margin saw a substantial increase to 12.9% in the first quarter of 2024," Honorary Vice Chairman Hongdi Brian Gu. "This signifies that XPeng, based on its smart EV business, has developed a unique approach to lift its profitability and international market potential by providing smart technologies."

Total revenue climbed 62.3% to RMB6.55 billion ($906.9 million), to beat the FactSet consensus of RMB6.19 billion. Revenue beat the consensus estimate by the widest margin - 5.8% - since results were reported in March 2022, when it topped expectations by 44%.

Revenue from vehicle sales rose 57.8% to RMB5.54 billion, helped by a 19.7% increase in deliveries to 21,821 EVs, with particular strength in deliveries of the X9.

Looking ahead, the company expects second-quarter deliveries of between 29,000 and 32,000 EVs, representing year-over-year growth of 25% to 37.9%.

Revenue for the current quarter through June is expected to be between RMB7.5 billion and RMB8.3 billion, compared with the current FactSet consensus of RMB9.83 billion.

The stock has now gained 4% over the past three months, while the iShares MSCI China ETF MCHI has rallied 17.9% and the S&P 500 index SPX has gained 6.6%.

-Tomi Kilgore

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05-21-24 1009ET

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