NIO stock advances alongside XPeng's (XPEV) stock's 10% post-earnings surge

• Nio stock jumped 3.8% to $10.50 in Wednesday's premarket.
• This comes on the heels of competitor XPeng reporting a quite poor third quarter.
• The market, however, has pushed XPEV stock up 10%.
• Peer Li Auto's stock has also soared 8.7%.

Nio (NIO) stock is getting a helpful nudge from competitor Xpeng (XPEV) on Wednesday morning. Xpeng reported rather poor earnings, but the market must have expected worse since XPEV shares jumped 10.5% to $8.11 in the premarket. Nio advanced 3.8% to $10.50, China's Li Auto (LI) also leapt 8.7%.

Xpeng stock earnings

Xpeng reported a loss per American depository share of $-0.36, which was 8 cents worse than Wall Street consensus. Revenue of $960 million also missed expectations by nearly $36 million. The quarter's gross margin of 13.5% was down from 14.4% in the same quarter a year ago but was much better than the first half of 2022. It reached 12.2% in Q1 and 10.9% in Q2. 

China's XPeng delivered 29,570 vehicles during the third quarter. This was a rise of 15% YoY. However, the EV manufacturer said it would produce between 20,000 and 21,000 during the fourth quarter. This would amount to a decrease of between 50% and 52% from Q4 2021. Still Xpeng deliveries for the first nine months of the year rose 56% over the same period from last year. By producing 5,000-odd vehicles in October and November, Xpeng will need to hit 10,000 in December. This last detail enthused the market as it was taken as a sign that production was moving back toward healthier levels after covid lockdowns had bitten into the schedule.

Source: XPeng

Management forecast revenue to come in between 4.8 billion and 51. billion Renminbi in the fourth quarter. This would be about 42% lower than a year ago.

“We will implement prudent cost control initiatives and improve operational efficiency,” said Dr. Hongdi Brian Gu, honorary vice chairman and president of XPeng. “As we plan a number of upcoming product and technology rollouts, we are confident that we can achieve significant improvement in both sales volumes and average selling price.”

Xpeng stock forecast

Year to date XPEV stock is down more than 85% prior to the surging rally in Wednesday's premarket. Now Wednesday's spike could send shares up to $9.55, which is where XPeng stock discovered resistance on November 15. XPEV shares momentarily made it up to $9.55 on Wednesday morning but then fell lower. Below here the EV maker found support at $6.25 in late October and the first few session of November. The long-term price target for bulls is at $20, but it is extremely doubtful that Xpeng stock makes it anywhere near there soon. 

XPeng requries a catalyst. The Chinese economy opening up due to protests against covid lockdowns may do part of the trick, but shareholders need something internal involving major growth to beg recouping their extensive losses from 2022. It is quite unlikely that catalyst appears before 2023. 

XPEV 1-day stock chart