Jefferies cuts XPeng (XPEV) to Underperform following 'recent missteps'

November 28, 2022 1:52 PM EST
Get Alerts XPEV Hot Sheet
Price: $10.50 -4.98%

Rating Summary:
    12 Buy, 7 Hold, 3 Sell

Rating Trend: Down Down

Today's Overall Ratings:
    Up: 10 | Down: 32 | New: 9
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Shares of XPeng (NYSE: XPEV) are down 0.92% in mid-day trading on Monday after Jefferies downgraded the stock from a Hold rating to Underperform. The downgrade follows what Jefferies calls “recent missteps in product and pricing Strategy” that lead to market share losses on existing models and weak reception of the company’s new flagship G9 SUV.

Jefferies analyst Johnson Wan wrote in a note about ZPEV, saying “After being hailed as one of the most successful EV startups in 2021, Xpeng's monthly deliveries peaked in Jun 22 at 15,295 units and dropped to a low of only 5,101 vehicles by Oct 22, down 59% yoy and 39% MoM. Its anchor model P7 (launched in Apr 20) has lost significant share with P7 deliveries peaking in March 2022 at 9,183 before sliding to 2,104 units by Oct, faced with competition for newer models from BYD seal, Nio's ET5 and Changan's SL03.”

Recent channel check suggests that nonrefundable orders for G9 are likely c.8k units, which cannot offset the slowdown of existing models. Jefferies has also seen interest levels for the G9 fall considerably, averaging 4,800 orders over a rolling 30-day period. Looking ahead, Xpeng's pipeline in 2023 may not be strong enough to arrest its volume decline.

Jefferies cut 22-24 sales volume estimates from 155k/268k/360k to 123k/159k/284k. The now expect Xpeng to make a small profit by 2026 with losses widening before then.

By Michael Elkins | [email protected]

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Jefferies & Co, Michael Elkins