Episode Details

XPeng (XPEV) Q2 2026 — Shares gapped 3.0% BELOW the prior close, never traded back to it, and closed 7.1% under their own session high at $11.15, -8.53% on the day - a twelve month closing low on 4.1x the thirty session median volume. Four sessions later they sit at $11.53, -5.41% against the pre-print close. XPeng reported Q2 2026 revenue of $2,910M, +8.0% year on year, at a gross margin of 20.7% against 17.3%. Underneath, 49.6% of gross profit came from the services line - just 13.7% of revenue - which the company describes as technical research work billed to an unnamed carmaker on milestones. Vehicle gross profit FELL 15.0% to $303M on vehicle revenue that ROSE 1.0%, and deliveries were flat. Operating cash flow for the six months to June was an OUTFLOW of $1.73B against an INFLOW of $1.13B. We rate XPEV a SELL at a fair value of $7.02 against $11.53. XPeng reports in renminbi; every dollar here is converted once at RMB 6.7851, the company's own implied rate. THE CALL: SELL (3/5, MODERATE) — base-case value ~$7.02 vs ~$11.53 today. KEY METRICS: - Q2 revenue $2,910M, +8.0% YoY and +51.5% QoQ - but that QoQ is off a March quarter when deliveries fell to 62,682 - Services revenue $398M (13.7% of revenue) produced $298M of gross profit - 49.6% of the $602M total, vs 23.5% a year ago - Vehicle gross profit -15.0% to $303M from $357M, on vehicle revenue +1.0%; vehicle margin 14.3% to 12.1% - Services margin 75.1% from 53.6% a year ago, 66.5% last quarter - a milestone line, not a run rate - Deliveries 103,295 vs 103,181, +0.1%; H1 deliveries -15.8%, H1 revenue -3.8% - Loss per ADS $0.21 vs a $0.06 estimate - 3.5x the modelled loss; an ADS is TWO ordinary shares - Net loss widened $127M, only $31M of it operating - $96M is below the line (FX $39M, marks $24M, interest $21M, tax $12M) - R&D $430M, +32.1%; SG&A $368M, +15.2% - annualised costs $3.19B vs gross profit $2.41B, or 1.32x - H1 operating cash flow MINUS $1.73B vs PLUS $1.13B a year earlier - a $2.85B swing; inventory +32.3%, payables $336M - Borrowings $1.87B to $2.91B, +55.5%; gearing 41.8% to 73.2% - both reproduce from the filed lines - The $5.97B cash position is NOT balance sheet cash: $2.10B is cash, $1.42B (23.8%) restricted; net cash $1.64B - Q3 2026 guide: deliveries 115,000-121,000 (-0.87% to 4.30% YoY), revenue $3.20B-$3.45B - Robotics round: every tranche at $2.03 a share, reproducing the filed 68.41% retained interest; stake marked $1.84B, $615M of it redeemable against XPeng - Market value $11.03B on 956.7M ADS (Class A + B, filed count); EV $9.39B = 0.85x revenue of $11.07B - Fair value $7.02: parts $9.16, whole company at 0.55x revenue $8.46, DCF $3.64 - weighted 35/35/30 - Bear $4.66 to bull $17.19 - a 3.69x range; the three ROUTES disagree by 152%, wider still - One target since this print - Barclays $14.00, itself +21.4% ABOVE the close; the other four are 91-290 days old What to watch: A quarter in which VEHICLE gross profit grows year on year (it fell 15.0% this time), a half year of operating cash flow that is merely FLAT rather than the $1.73B outflow just reported, or a services line that repeats at scale without a milestone behind it, would each break our thesis Also on YouTube: @ChargedAlpha DISCLAIMER: For informational and educational purposes only. Not financial advice. Do your own research before any investment decision.