XPeng (XPEV) shares rose over 4% in premarket trading Thursday, defying a wider-than-expected first-quarter loss and a sharp revenue decline, as investors zeroed in on improving gross margins and a solid recovery outlook.
The Chinese electric vehicle maker posted a net loss of 1.78 billion yuan ($262.6 million) for Q1 2026, significantly deeper than the 811.9 million yuan loss analysts had pencilled in and nearly triple the 664 million yuan loss from a year earlier. Revenue fell 18% year-over-year to 13.03 billion yuan, missing the 13.55 billion yuan consensus estimate.
Despite the top- and bottom-line misses, gross margin climbed to 20.6% — up from 15.6% in Q1 2025 — while vehicle margin rose to 12.1% on the back of cost reductions and an improved product mix. The margin gains suggested that XPeng is becoming more efficient per vehicle, even as deliveries dropped roughly a third to 62,682 units amid a broader EV slowdown in China.
Looking ahead, XPeng guided for Q2 deliveries of 100,000–106,000 vehicles, roughly flat year-over-year but a meaningful step up from Q1’s depressed levels. Revenue guidance of 19.60–20.80 billion yuan also pointed to a strong sequential rebound. The upbeat outlook, combined with the margin improvement, overshadowed the bottom-line miss and helped push XPEV stock to $17.07 in premarket, up 3.8%.
Wall Street remains broadly bullish: 27 analysts rate the stock a Buy with an average price target of $24.44 — implying about 48% upside from the current levels — though BNP Paribas Exane downgraded the shares to Sell in late April. The stock had fallen roughly 22% year-to-date entering the report, which may have softened the negative reaction.
