LI - Why did XPeng stock drop today? Lower prices could pressure margins further

2023-04-04 15:59:51 ET

XPeng ( NYSE: XPEV ) fell 7.50% with investors continuing to show anxiety over the impact of a pricing war in the Chinese electric vehicle sector. XPeng ( XPEV ) is seen being at more risk than Nio ( NIO ) and Li Auto due to a product lineup and pricing range that more closely matches that of Tesla ( TSLA ) than its peers. XPeng is also investing heavily in new model rollouts and capacity expansion, which will pressure margins in the year ahead.

Seeking Alpha contributor Juxtaposed Ideas noted recently that ongoing price wars in China have naturally impacted XPeng's ( XPEV ) deliveries and margins, triggering further headwinds for forward execution. However, the long-term growth potential for the EV upstart is seen supporting share price at the $7.00 level.

The short interest level on XPEV is at 11.02% of total float, which is higher than the short interest percentages for rivals Nio ( NIO ) and Li Auto ( LI ). The electric vehicle stock also has a lower Seeking Alpha Quant Rating and score than its peers.

Sector watch: EV stocks are in focus as investors weigh Tesla deliveries, pricing war and OPEC actions.

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