Electric-vehicle stocks have been badly beaten up in recent months. Investors are looking for a catalyst to restart a rally in the sector. The next potential one will be an earnings report from Chinese EV maker XPeng Thursday morning.
XPeng’s U.S.-listed shares (ticker: XPEV) are down 46% over the past three months. Shares of peers NIO (NIO) and Li Auto (LI) are off 42% and 43%, respectively, over the same span. The pain hasn’t affected only Chinese names. Tesla stock (TSLA) is down 25%. Shares of Fisker (FSR) and the special purpose acquisition company merging with Lucid Motors are down 64% and 72%, respectively. The S&P 500 and the Dow Jones Industrial Average are both up over the past three months.
It has been hard for EV investors lately.
The sector has been battered by several things beyond the control of the companies. Higher inflation and higher rates hurt high-growth stocks like EV stocks more than others. Higher rates make financing growth expensive and hurt valuation multiples of growth stocks. And a global semiconductor shortage is constraining automotive production around the globe.
XPeng has the potential to offer hope on several fronts. For starters, the company can talk about Chinese demand. China is the world’s largest market for new cars and new EVs. Management can also talk about the semiconductor shortage. And investors will want to hear about XPeng’s progress regarding autonomous-driving technology.
Here’s what to look for Thursday. Wall Street expects XPeng to report an 11-cent loss on $416 million in sales for the first quarter. The company reported a seven-cent per share loss from $437 million in sales for the fourth quarter of 2020.
A sales “beat” would be good news. Investors will be interested in future production as well. XPeng peer NIO said on its early May earnings conference call that the global semiconductor shortage would get worse in the second quarter. The sentiment has been echoed by many auto makers, and the chip shortage is constraining auto production around the world. Now more than a month into the second quarter, investors will want to know when the parts shortage might ease.
XPeng has a new vehicle, a Lidar-equipped sedan, due to be shipped in the fourth quarter of 2021. Lidar, short for “laser-based radar,” is a high-end driver-assistance feature. Not many production cars have Lidar yet. The demand for the sedan and pricing will help investors learn something applicable to Lidar stocks such as Luminar Technologies (LAZR).
XPeng has released newer versions of its XPilot software system and hopes to have full self-driving cars in a few years. Tesla CEO Elon Musk hopes to accomplish the same thing without Lidar sooner, but achieving full self-driving, without human intervention required, will be a catalyst for whoever can offer it safely. Autonomous driving just may be too far in the future to help XPeng stock and sector shares tomorrow. The company will host a conference call at 8 a.m. Eastern time to discuss results.
XPeng stock is down 0.2%, at $24.87, in recent trading.
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