Chinese electric vehicle company XPeng (NYSE: XPEV) is set to report earnings for its latest quarter on Friday, March 17.
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In December, the company, which recently launched its new P7i sports sedan for the Chinese market, reported fourth-quarter 2022 deliveries of 22,204, while it said full-year 2022 deliveries were 120,757, over 47% below the 41,751 vehicles delivered in the fourth quarter of 2021.
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The drop in deliveries is likely to have significantly impacted XPeng's revenue, with the company stating in its third-quarter results that it expects fourth-quarter revenues to be between RMB4.8 billion and RMB5.1 billion, representing a year-over-year decrease of approximately 40.4% to 43.9%.
2022 has been a challenging year for automotive firms, especially in China, as Covid-19 lockdown restrictions lasted longer than those in other countries, exacerbating supply chain and production challenges.
As a result, XPeng's share price was also affected. It is currently trading at above $8 per share, but in June 2022, it traded over the $35 per share mark. It is down more than 69% in the last 12 months and over 22% so far this year, with little sign of a push higher.
Meanwhile, analysts in the last few months have been downgrading the stock.
Last month, HSBC analyst Yuqian Ding downgraded XPeng to Hold from Buy with a $10 price target, while Macquarie analyst Erica Chen downgraded XPeng to Underperform from Neutral.
In January, JPMorgan's Nick Lai downgraded XPeng to Neutral from Overweight, cutting the firm's price target on the stock to $9 from $11 per share.
The analyst said in a note to clients that the reopening trade in autos is “playing out rapidly and could run out of steam in near term.”
He added that the market seems to be rapidly pricing in a 2023 recovery scenario with economic momentum resuming. However, he felt that the recent rally “has priced in a rosy scenario while corporate earnings and underlying industry data are still lagging.” The analyst cited valuation and potential for estimate cuts for his XPeng downgrade.
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