The State of XPeng: Rollercoaster Ride for Investors

The upcoming release of XPeng's second-quarter results has left investors hanging between hope and despair. This eagerly anticipated report will offer crucial insights into pricing trends and demand for XPeng (ticker: XPEV) and the wider Chinese electric vehicle (EV) industry, impacting major players like Tesla (TSLA).

According to Wall Street expectations, XPeng is predicted to announce a loss of 31 cents per share from sales totaling $707 million, a decline from the previous year's loss of 46 cents per share from $1.1 billion in sales.

The disappointing sales figures reveal a downward trend. In the second quarter, XPeng delivered approximately 27,000 vehicles compared to just over 34,000 in the same period last year. In contrast, Chinese wholesale EV shipments increased by approximately 40%, reaching 1.4 million units in the second quarter.

These declining sales and subsequent loss of market share have caused XPeng's American depositary receipts (ADRs) to plummet by approximately 30% over the past year. However, taking a different perspective, the company's shares have surged by over 60% in the last three months. This boost was fueled by an unexpected investment from Volkswagen (VOW3. Germany), with both companies collaborating on the development of two EV models tailored specifically for the Chinese market.

It's worth noting that XPeng has shares listed on both the Hong Kong and U.S. stock exchanges, with each U.S.-listed ADR representing two shares of common stock.

Following the VW announcement, XPeng's shares reached a peak of over $23 in late July. However, they closed at $15.65 on Thursday, a significant drop of over 30% since then. Concerns about weakening demand and potential price wars have been exacerbated by recent price cuts among various EV manufacturers, including Tesla.

To reassure shareholders, XPeng must present robust delivery guidance and provide positive commentary on overall EV demand in China during its upcoming conference call scheduled for 8 a.m. Eastern time.

• Al Root, Dow Jones