- XPEV shares are trading lower by 4% today after the Bernstein analyst downgraded the stock.
- Bernstein analyst Eunice Lee downgraded XPeng Inc (NYSE:XPEV) from Outperform to Market Perform and lowered the price target from $16 to $12.
- Lee expects XPeng to face pressure from growing competition and therefore lowered sales volume outlook for P7/P7i, G9, G3i, and P5 models.
- Sales momentum could increase from Q3 with new launches, but concerns loom over the success of G6 following the disappointing acceptances of P5 and G9.
- Also Read: XPeng Q4 Highlights: Registers 47% Decline In Deliveries, Expects Q1 Deliveries Of 18K-19K, Updates On Cost Control Measures
- The RMB200-300k SUV also faced tough competition from Tesla Inc (NASDAQ:TSLA) and BYD Co, Ltd (OTC:BYDDF) (OTC: BYDDY).
- The ongoing EV price war also pressurized the margins as XPeng has limited pricing power. Lee projected negative vehicle margins for Q1 as XPeng offered discounts following Tesla’s move.
- The analyst highlighted XPeng’s organizational restructuring and cost-cut initiatives likely to improve margins by ten bps. However, the margin expansion is not likely before late 2023 or 2024.
- Though XPeng revamps its marketing system, Lee finds monetization tricky.
- XPeng’s cash position serves as a confidence boost alleviating concerns about the company going out of business.
- XPeng must demonstrate the pathway to positive cash flow and profit. Lee pushes out breakeven to 2026.
- Price Action: XPEV shares are trading lower by 4.29% at $9.49 on the last check Friday.
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