tesla
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Like all other electric car manufacturers, we have a China problem. Investors’ views on how tough the situation is will vary from day to day.
Tesla stock rose early Tuesday, rising 1.7% to $177.83.
S&P500
and
Nasdaq Composite
They decreased by 0.1% and 0.3%, respectively.
It was supported by earnings from Chinese EV maker XPeng. XPeng reported better-than-expected results and provided solid financial guidance for the second quarter, despite what management called “intense market competition.”
Shares rose about 22% in early trading.
That’s in contrast to what happened on Monday. Tesla shares fell 1.4% to close at $174.95 after gains from Li Auto.
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The Chinese EV maker reported lower-than-expected revenue, with management expecting second-quarter revenue of about $4.2 billion, up just 6% from a year earlier. That was about 20% below Wall Street expectations.
Demand was not behind Lee’s disappointing leadership. Pricing made it happen. Lee expects to ship about 108,000 cars in the second quarter, an increase of about 25% from a year ago.
Lee’s U.S.-listed American Depositary Receipts closed 13% lower at $21.71 on Monday.
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EV prices have been falling in China for several months due to increased competition. This has been a problem for all automakers, including Li, XPeng, and Tesla.
Price cuts are also troubling Wall Street. Following Li’s results, CFRA analyst Aaron Ho downgraded the stock to “sell” from “hold.” “We are neutral on Li Auto’s fundamentals, primarily due to fierce competition in China’s EV market, which is keeping R&D and marketing expenses high while limiting average selling price growth,” he wrote.
XPeng seems to be doing things better. Still, all three stocks are falling.
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Through early trading on Tuesday, Lee and XPen shares have fallen about 44% and 31% since the beginning of the year. Tesla stock fell about 28%.
Email Al Root at allen.root@dowjones.com.
