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China EV maker Xpeng expects Q4 deliveries to decline by 50%

Yahoo Finance Live anchors discuss the rise in stock for Xpeng following the companies quarterly earnings.

Video Transcript

[AUDIO LOGO]

BRIAN SOZZI: Welcome back. Shares of Chinese EV maker Xpeng in focus following a Q3 earnings report that saw the company miss on delivery estimates as well as issuing some brutal 4Q numbers. Yeah, a little bit of a surprising market reaction here. I think this really reflects more of them striking a more upbeat tone in terms of deliveries for the next couple of months here. But really not a great quarter from Xpeng.

BRAD SMITH: Yeah, quarterly vehicle deliveries, they hit about 29,000-- or 29,570. That was a 15% increase year over year. You also saw that reflected in revenues. That jumped by about 19.3% year over year.

And ultimately here, it's just about how they're going to kind of maintain the margins going forward too. The quarterly gross margin, that was 13 and 1/2 percent. That actually moved lower, it ticked down by about 9/10 of a percent year over year too.

JULIE HYMAN: Yeah, and the quarterly deliveries-- quarter over quarter deliveries keep declining. The company is now predicting that this current quarter will see the fourth straight quarterly decline. It's interesting to see the shares trading higher. A little bit confusing, I've got to say. The company--

BRIAN SOZZI: Is this a Julie Hyman short covering rally? I know you love those short positions, Julie.

JULIE HYMAN: I don't know. I haven't had a chance to look at the short interest in this stock. But it is a little bit unusual here. I mean, of course, you've got to figure that at some point, things are going to get a little bit better for the likes of Xpeng and some of the other China-based companies when reopening happened because some of what's going on here--

It's difficult to ascertain exactly how much. But certainly, some of what's going on here is because of what's happening in China right now. People aren't going out and buying cars if they can't-- if they are not being made, if they can't leave their homes, et cetera. There is very little short interest in this stock.

BRIAN SOZZI: Oh, OK.

JULIE HYMAN: I don't know how short interest works for ADRs, to be fair.

BRIAN SOZZI: Duly noted. I will say this, though. And I'll put myself out there to get dragged on Twitter. If this Xpeng quarter-- I mean, it was very disappointing, it really was. Now, what does that mean for Tesla? What's the readthrough? How is Tesla doing in China right now?

Because if Xpeng had this type of quarter, you would have to think Tesla is probably also not necessarily having a great fourth quarter in China, which has been a big key growth driver for their business and the stock price.

BRAD SMITH: Yeah, we can also keep an eye on shares of NIO. They're expected to put some of their monthly numbers out there tomorrow as well. So perhaps we'll get that update on December 1 at the top of the month there. But again, yes, coming back to what this signals in China, where the demand is at--

And we have seen a shift, sentiment-wise, within the region for more of the homegrown brands to actually have better favorability versus a US grown brand in a Tesla. This has larger implications, perhaps, even for how a GM or a Ford might do selling into the region too, near-term.

JULIE HYMAN: Yeah, it seems like Xpeng, though, competes more directly with-- there's different classes of the EVs when you look at the Chinese car market, right? So Tesla and BYD probably are the most direct, right, for Xpeng. And then you have NIO and Li on the lower end.

BRIAN SOZZI: Even then, their lower-end car, it's cool stuff. I mean, the technology is off the charts in these cars.

JULIE HYMAN: Yeah.

BRAD SMITH: Yeah, it's really two sedans here that we're talking about, the P7 Smart Sports Sedan here. That would probably be in Sozzi's camp, that's 16,700--

BRIAN SOZZI: I'm more a Lucid guy.

BRAD SMITH: Oh, more a Lucid? Interesting.

BRIAN SOZZI: I'm more of a Lucid guy, OK? That's how I'm rolling. I'm rolling for the $200,000 plug-in electric cars.

BRAD SMITH: I was going to say, that's going to be about 75% more expensive.

BRIAN SOZZI: Yes.

BRAD SMITH: Perhaps--

JULIE HYMAN: Yeah, I guess you're in the camp of the higher-end consumers who are--

BRIAN SOZZI: I'm not trying to pick up an electric Hyundai here, people. I don't want no electric Hyundai.

JULIE HYMAN: I think that the Hyundai-- is it the Ioniq? Ionique?

BRIAN SOZZI: It's cool

JULIE HYMAN: It's kind of a cool-looking car.

BRIAN SOZZI: I can see you in that, Julie. I think you would like that. I think-- I can-- I actually thought that. I've driven past them. And I'm like, you know what? I could see Julie in that with pair of 7-11 Crocs on.

BRAD SMITH: Yes.

JULIE HYMAN: Definitely not the latter.

BRAD SMITH: With all the Jibbitz.

JULIE HYMAN: Definitely not the latter.

BRAD SMITH: All the Jibbitz happening.

JULIE HYMAN: Yeah, well--

BRAD SMITH: I'm more of a Mercedes EQ person myself.

JULIE HYMAN: Of course you are. Yeah, I think--

BRIAN SOZZI: The high-end life.

JULIE HYMAN: I think all of us are that.

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