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Why EHang Stock Is Falling Today

By Lou Whiteman - Apr 16, 2021 at 12:49PM

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Earnings seem to have left investors somewhat underwhelmed.

What happened

Shares of EHang Holdings (EH -0.32%) traded down as much as 11% on Friday following the Chinese autonomous flying taxi manufacturer's quarterly earnings report. The results were not bad, but this is a speculative stock arguably priced for perfection and the quarter certainly was not perfect.

So what

On Friday EHang reported a fourth-quarter loss of $0.07 per share, missing estimates by $0.04, on revenue of $8.4 million. Quarterly revenue was up 6% year over year but fell a little short of expectations. The company sold 22 of its EH216, its flagship autonomous aerial vehicle, compared to 26 units sold in the fourth quarter of 2019.

Rendering of flying taxis.

Image source: Getty Images.

For the full year, EHang reported total revenue of $27.6 million and an operating loss of $14 million. Revenue was up 47.8% from 2019.

Founder and CEO Huazhi Hu in a statement praised the company's progress in what was an "unusual year" due to the pandemic.

"Our record of more than 10,000 safe trial flights of the EH216, including passenger-carrying flights, in 40 cities of eight countries across Asia, Europe and North America to date and in various extreme environments demonstrates the robustness of our integrated technologies for autonomous flying, full redundancy and cluster management," Hu said.

Now what

EHang missed estimates but demonstrated growth and appears to be making progress bringing its technology to market. So why the sell-off?

It is likely because that growth and progress is already priced into the shares. EHang is valued at the market at more than $1.4 billion, despite generating just $27.6 million in revenue in 2020. Throw in some recent criticism from a short seller accusing EHang of inflating results, and investors are likely taking a cautious approach.

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