Why Is Xpeng (XPEV) Stock Up 35% Today?
China-based electric vehicle (EV) manufacturer Xpeng (NYSE:XPEV) just released its third-quarter 2022 financial results and XPEV stock investors are buying shares like there’s no tomorrow. This is happening even though Xpeng fell short of analysts’ expectations. Instead, today’s traders are focusing on the company’s improvement in vehicle deliveries and revenue generation.
It’s certainly a tough time to operate an EV business in China. Covid-19 lockdowns are hampering business activity and the EV industry is crowded and competitive.
The stakes were high, then, as Xpeng issued its quarterly results this morning. As it turns out, the automaker missed Wall Street’s forecast for Q3 2022 of $1 billion in revenue and an earnings loss of around $293 million.
Xpeng’s actual result was $959 million in Q3 revenue and an earnings loss of $334 million. Given those misses, you might assume that financial traders would dump their shares of XPEV stock. However, one must learn to expect the unexpected on Wall Street.
What’s Happening With XPEV Stock?
Amazingly, XPEV stock shot more than 30% higher within minutes of the opening of the trading session today. Half an hour later, the shares were still heading higher.
This might seem counterintuitive, since Xpeng fell short of analysts’ projections. Yet, perhaps during these challenging times in China’s EV market, traders were only looking for improvement.
If so, then investors got exactly what they wanted. On a year-over-year (YOY) basis, the EV maker’s revenue increased about 19%. Deliveries also grew 15% YOY to 29,570.
To be honest, any improvement in these conditions is impressive. Whether the market will be so forgiving in the fourth quarter is another story entirely, though.
It’s also possible that investors liked what Xpeng Honorary Vice Chairman and President Hongdi Brian Gu had to say in the report. “We will implement prudent cost control initiatives and improve operational efficiency,” Gu assured.
In any case, XPEV stock is shifting into high gear today. In time, investors will find out whether these astonishing gains are actually sustainable.
On the date of publication, David Moadel did not hold (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.
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