On Tuesday, Morgan Stanley (NYSE:MS) maintained its Overweight rating on XPeng Inc. stock (NYSE:XPEV) with a steady price target of $18.00. The firm highlighted the electric vehicle company's narrower net loss in the fourth quarter of 2023, which was significantly less than anticipated.
XPeng reported a net loss of Rmb1.35 billion for the quarter, compared to Rmb3.9 billion in the previous quarter, surpassing Morgan Stanley's expectations of a Rmb2-2.2 billion loss.
The company's revenue in the fourth quarter surged 53% quarter-over-quarter to Rmb13.05 billion, which falls within its guidance range of Rmb12.7-13.6 billion. This increase in revenue was attributed in part to a mild average selling price (ASP) expansion, thanks to a higher mix of its G9 model sales.
Additionally, XPeng saw its vehicle gross margin improve by 10.1 percentage points quarter-over-quarter to 4.1%, marking a return to positive figures.
Operating expenses presented a mixed picture, with research and development costs remaining flat compared to the previous quarter, while selling, general, and administrative expenses climbed 14%. The operating margin shrunk to -16%, which was reported to be the best quarter since the company's initial public offering.
Other income for XPeng included Rmb352 million from government subsidies and a Rmb560 million fair value gain on derivative liability. Looking ahead, XPeng's first-quarter volume guidance is set at 21-22.5 thousand units, aligning with the adjusted expectations after a slower start to the year.
This implies that March sales are expected to rise to between 8.2-9.7 thousand units. The company predicts a 52-56% quarter-over-quarter decline in total revenue for the first quarter, to Rmb5.8-6.2 billion, with a double-digit ASP increase driven by the ramp-up of the X9 model. Morgan Stanley noted that new model launches, order intake, and margin trends will be key areas of interest for investors in the upcoming quarter.
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