Hong Kong Stock Market Update | XPENG-W drops over 6%, leading the decline in automotive stocks. Tesla's fourth-quarter adjusted revenue falls below expectations.
The stock prices of XPENG-W and Li Auto-W fell in early trading, dropping by over 6% and 3.75% respectively. In addition, Tesla's fourth-quarter adjusted revenue was lower than expected, causing its stock price to decline in after-hours trading. UBS released a research report pointing out that the Chinese electric vehicle industry is facing challenges in price competition. Large companies such as BYD and CATL will become market consolidators, while smaller, loss-making companies will face greater difficulties. The deteriorating refinancing environment will also limit companies' investments in research and development and market positioning.
Zhitong App learned that automotive stocks fell across the board in early trading. As of the time of writing, XPENG-W (09868) fell 5.11% to HKD 35.3, LI AUTO (02015) fell 3.75% to HKD 107.7, and GWMOTOR (02333) fell 1.64% to HKD 8.4.
In terms of news, Tesla's fourth-quarter earnings report fell short of market expectations. Tesla's fourth-quarter revenue was USD 25.17 billion, lower than analysts' expectations of USD 25.87 billion. The adjusted earnings per share for the fourth quarter were USD 0.71, lower than analysts' expectations of USD 0.73. The gross margin for the fourth quarter was 17.6%, lower than analysts' expectations of 18.1%. Tesla stated that its sales growth rate in 2024 may be significantly lower than in 2023. Tesla's stock price initially fell more than 5% in after-hours trading, but the decline narrowed to 3% later.
UBS released a research report stating that the Chinese electric vehicle industry is facing real challenges, especially in terms of price competition. In a deteriorating pricing environment, the bank believes that cost leaders with economies of scale, such as BYD in the electric vehicle sector and CATL in the battery sector, will become market consolidators that can maintain healthy gross margins. Loss-making companies with limited sales volume will suffer further losses. They need continuous refinancing to maintain daily operations and technology development. However, with the recent stock market sell-off, the refinancing environment has worsened, making it more difficult for them to raise funds, which limits their investment in research and development and market positioning.