XPeng Stock Pops After Earnings. Why the Tesla Rival’s EV Sales Wowed Wall Street.

XPeng sees vehicle deliveries between 113,000 and 118,000, and revenue between $2.7 billion and $2.9 billion in the third quarter. (Qilai Shen/Bloomberg)

XPeng stock rose Tuesday after the Chinese electric-vehicle maker reported better-than-expected second-quarter results.

Tuesday morning, XPeng announced a second-quarter per-share loss of four cents from sales of just under $2.6 billion. Wall Street was looking for an 11-cent loss from sales of $2.5 billion, according to FactSet.

XPeng’s U.S.-listed American depositary receipts rose 4.2% to close at $20.74 on Tuesday, while the S&P 500 fell 0.6% and the Dow Jones Industrial Average finished flat.

Coming into Tuesday trading, XPeng ADRs were up about 68% this year. Strong sales growth has helped propel the stock.

XPeng delivered 103,181 cars in the second quarter, up 242% year over year.

“By 2025, we [had] completed upgrades to the next generation technology platforms for smart and electrification technologies, further strengthening our technology leadership over our peers,” said CEO Xiaopeng He in a news release.

For the coming quarter, XPeng expects to deliver 113,000 to 118,000 cars. XPeng delivered about 47,000 vehicles in the third quarter of 2024. XPeng delivered 36,717 vehicles in July, leaving about 79,000 for August and September, or about 39,500 a month, to meet guidance.

Vehicle sales should grow by about 150% year-over-year in the third quarter. Sales, however, are expected to be up about 100% at about $2.8 billion. Wall Street currently projects closer to $2.9 billion.

Weaker pricing has affected the entire Chinese EV industry. “In the face of intense industrywide price competition, we remain committed to a long-term, sustainable growth strategy, with rapidly improving operational quality,” added XPeng co-President Brian Gu.

Despite lower pricing, the company has managed to improve profit margins. The gross profit margin was 17.3% in the quarter, a record high, and up three percentage points year over year.

Overall, it looks like a solid earnings report. And the initial positive stock price reaction, given the share’s strong year-to-date performance, shows that investors agree.

Write to Elsa Ohlen at elsa.ohlen@barrons.com and Al Root at allen.root@dowjones.com