Why XPeng (XPEV) Shares Are Falling Today - XPeng (NYSE:XPEV)

XPEV shares are trading lower by 4% today after the Bernstein analyst downgraded the stock.
Bernstein analyst Eunice Lee downgraded XPeng Inc 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 TSLA and BYD Co, Ltd BYDDF 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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Why XPeng Shares Are Falling Today