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On Wednesday, Morgan Stanley (NYSE:MS) reaffirmed its confidence in XPeng (NYSE:XPEV), maintaining an Overweight rating and a price target of $26.00. The automotive company, currently trading near InvestingPro’s Fair Value estimate, reported a reduced net loss for the first quarter of 2025, which was better than expected, largely due to an increase in other income from government subsidies. With a market capitalization of $18.7 billion and a strong financial position holding more cash than debt, XPeng’s net loss for the quarter was Rmb664 million, compared to a loss of Rmb1.3 billion in the previous quarter.
XPeng’s revenue for the first quarter saw a significant year-over-year increase of 141%, coming in at Rmb15.8 billion, which was above the company’s guidance range of Rmb15-15.7 billion. This impressive performance aligns with InvestingPro data showing a robust 33.2% revenue growth over the last twelve months and analysts forecasting 97% growth for FY2025. This revenue growth was driven by robust vehicle deliveries, which exceeded the company’s guidance, reaching 94,000 units, a 3% increase from the previous quarter. Despite a 4% decline in average selling price (ASP), the company managed to expand its vehicle gross margin to 10.5%, contributing to an overall gross profit margin of 14.6%, slightly higher than Morgan Stanley’s estimate.
The improvement in gross margin was attributed to the benefits of increased scale and ongoing efforts to reduce the bill of materials (BOM) costs, which helped to counterbalance a mix of sales that included a higher proportion of the lower-margin MONA M03 model. Non-vehicle gross profit margin stood impressively at 66.4%, contributing to a group gross profit margin of 15.6%, marking a 1.1 percentage point increase from the previous quarter.
Operational expenses saw a decrease in the first quarter, with research and development costs dropping by 1% and selling, general and administrative expenses declining by 14% compared to the last quarter. This reduction in expenses was likely influenced by the absence of new model launches during the period. The company also reported a substantial increase in other income, which amounted to Rmb544 million, up from Rmb196 million in the fourth quarter of the previous year.
Looking ahead, XPeng provided guidance for the second quarter of 2025, forecasting vehicle deliveries between 102,000 and 108,000 units, which represents a 9-15% quarter-over-quarter increase. This guidance aligns with market expectations and suggests a conservative estimate for May-June deliveries. Revenue for the second quarter is projected to grow by 11-18% quarter-over-quarter to Rmb17.5-18.7 billion, indicating a 2% sequential expansion in ASP, likely due to a higher sales mix of the facelifted models G6, G9, and X9. For deeper insights into XPeng’s financial health, growth prospects, and 10+ additional ProTips, explore the comprehensive Pro Research Report available on InvestingPro.
In other recent news, XPeng reported significant growth in vehicle deliveries, with April figures nearly tripling compared to the same period last year, reaching 35,045 units. This marks the sixth consecutive month of deliveries surpassing 30,000 units, highlighting strong demand in the Chinese electric vehicle market. Additionally, XPeng launched a new variant of its P7+ sedan at the 2025 Shanghai auto show, featuring a faster-charging battery capable of full charge in just 12 minutes, which has garnered positive investor reactions.
Barclays (LON:BARC) recently increased its price target for XPeng shares from $7.00 to $20.00, despite maintaining an Underweight rating, citing the company’s substantial growth in vehicle deliveries. The analyst noted XPeng’s momentum in refreshing existing models and launching new products. However, concerns were expressed about the company’s valuation, suggesting it may be overvalued despite the raised target.
Meanwhile, in the broader market context, Chinese stocks, including XPeng, experienced declines amid escalating trade tensions between the U.S. and China. This downturn followed Beijing’s decision to impose a 34% levy on U.S. imports. Despite these challenges, XPeng continues to innovate, as demonstrated by the introduction of its new P7+ model, aiming to strengthen its position in the competitive EV market.
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