Why XL Fleet Stock Is Sinking Today

What happened

Shares of XL Fleet (XL +3.33%) were trading sharply lower on Friday, after the company reported second-quarter earnings that fell short of Wall Street's estimates and provided a subdued outlook for the remainder of 2021.

As of 11:30 a.m. EDT, XL Fleet's shares were down about 13.9% from Thursday's closing price.

So what

XL Fleet, which offers systems that can be retrofitted to turn internal-combustion trucks into hybrids, reported after the U.S. markets closed on Thursday that it lost about $10.5 million in the second quarter, or $0.08 per share, on revenue of $3.7 million. 

Those results fell short of Wall Street's expectations, such as they were. The company doesn't get a lot of coverage from Wall Street analysts, but the (two) analysts polled by Thomson Reuters had expected a loss of $0.05 per share on revenue of $4.4 million, on average. 

XL Fleet turns trucks owned by commercial and municipal fleets into hybrids. Image source: XL Fleet.

More to the point, the company is still struggling with the supply chain issues that caused it to miss estimates in the first quarter. CEO Dimitri Kazarinoff said that right now, the problem isn't so much with XL Fleet's own manufacturing, it's that its fleet customers are having trouble getting new trucks to convert because of the global semiconductor shortage. 

While interest from commercial-fleet customers remains strong, Kazarinoff said, "Supply chain issues and wide scale shortages of key materials, especially microchips, continue to impact the global automotive industry, significantly interrupting the ability of fleet customers to secure new vehicles on which our electrified drive systems are installed." 

Now what

Kazarinoff said auto investors should expect XL Fleet's sales to continue to be limited by the shortage of commercial vehicles into 2022. But, he said, the company is working to expand in other areas, including charging infrastructure, while continuing to develop a fully electric powertrain solution that it expects to bring to market next year.