XPeng Shares Tumble as Revenue Forecast Disappoints

The investment narrative surrounding Chinese electric vehicle maker XPeng has encountered turbulence. Despite a powerful surge in annual vehicle deliveries, two recent developments sent its stock price into a sharp decline, revealing investor anxiety in a cooling market.

The pressure on XPeng is part of a broader sectoral shift. Rivals including Nio and Li Auto also saw their Hong Kong-listed shares lose value. The Chinese EV market is approaching a significant transition, with over 20 local governments either allowing state-backed vehicle exchange subsidies to expire or modifying them. This signals an end to the era of aggressive, state-fueled demand, compelling manufacturers to compete on their own merits.

A Forward-Looking Warning Shakes Confidence

The primary catalyst for the sell-off was not the monthly delivery figures, but rather the company's outlook. XPeng issued a revenue forecast for the current fourth quarter that fell approximately 15% below analyst consensus estimates. This significant miss immediately overshadowed positive news, such as the company having already achieved its full-year target of 350,000 vehicle deliveries. The market's reaction was swift: Weiss Ratings downgraded the stock to a "Sell" recommendation.

Should investors sell immediately? Or is it worth buying XPeng?

Can Software and Services Provide a Cushion?

Attention now turns to whether XPeng can leverage its technology segment to offset cyclical hardware sales volatility. In the third quarter, technology service revenue—boosted in part by the partnership with Volkswagen—helped drive the gross margin to a record 20.1%. The strategic focus is firmly on monetizing software, particularly the XNGP advanced driver-assistance system and new AI models.

The critical question for investors is whether this will be sufficient for the company to reach its targeted operational breakeven this quarter, despite the subdued revenue expectations. The answer will likely be a decisive factor for the share price trajectory in the coming weeks.