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XPeng Climbs, but This Much-Watched Stock Is Plunging

By Dan Caplinger – Nov 23, 2021 at 8:55AM

Key Points

  • Markets looked poised to open mixed on Tuesday.
  • XPeng released strong financial results that sent its stock higher.
  • However, another company's quarterly report didn't inspire as much confidence.

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There's a lot of fear about what the holidays could bring.

After substantial gains in the past couple of months, the stock market is once again becoming turbulent. Investors are trying to figure out the future direction of the global economy in the near term, and unfortunately, they're getting a lot of mixed messages about what the future could hold. That showed up in premarket moves on Tuesday morning. Futures for the Dow Jones Industrial Average (^DJI 0.45%) were up 23 points to 35,594, but S&P 500 (^GSPC 0.60%) futures were down 3 points to 4,677, and Nasdaq Composite (^IXIC 1.34%) futures were down another 44 points to 16,338.

Earnings results are contributing to the mixed views on Wall Street, as companies in different industries face very different conditions. Chinese electric vehicle star XPeng (XPEV 6.01%) was on the rise in premarket trading Tuesday after reporting solid earnings. However, another company wasn't as lucky, suffering a huge double-digit percentage drop following its quarterly financial report. Below, we'll give the details on both companies.

XPeng drives higher

Shares of XPeng were on the move Tuesday morning, rising more than 4% in premarket trading before the opening bell. The Chinese EV company's third-quarter financial results were strong, and investors took heart in comments that pointed to further success in the year ahead.

Two XPeng P7 sedans.

Image source: XPeng.

Investors were already aware that quarterly vehicle deliveries had reached a new record, almost tripling from year-earlier levels to 25,666. XPeng added the related financial metrics, with total revenue adding up to 5.72 billion Chinese renminbi (about $895 million), up 187% year over year. Adjusted losses widened in absolute terms but were down slightly in per-share terms.

XPeng projected continued gains for the remainder of the year. The car company expects to deliver 34,500 to 36,500 vehicles in the fourth quarter, which would be 166% to 182% higher than in the fourth quarter of 2020. Revenue growth of 149% to 163% to between 7.1 billion and 7.5 billion renminbi ($1.11 billion to $1.17 billion) also gave shareholders a lot of confidence for the future.

XPeng has been able to keep up its momentum despite the challenges of semiconductor chip shortages and other supply chain issues. With its autonomous driving capabilities making steady advances, XPeng is doing lots of things right to stake its claim in the fast-growing EV space.

A better buy?

Meanwhile, the retail sector delivered some bad news for investors, as Best Buy (BBY 1.54%) shares were down 12% in premarket trading Tuesday morning. The electronics retailer said its third-quarter results were better than expected, but that didn't give investors any apparent comfort.

Best Buy struggled against tough comparisons to last year's big surge in business. Revenue was largely flat year over year, with domestic comparable sales rising just 2% following the 22.6% gain it posted in the third quarter of last year. Adjusted earnings rose just 1% from year-ago levels to $2.08 per share.

Operationally, Best Buy achieved some notable milestones. CEO Corie Barry pointed to a 400% rise in same-day delivery fulfillment, doubling the percentage of products that it managed to deliver within one day compared to how it did a year ago. Even as shoppers return to stores, Best Buy saw its digital sales remain at highly elevated levels compared to where they were before the pandemic, and the company sees that trend remaining in place for the foreseeable future.

Even somewhat favorable guidance wasn't enough to encourage Best Buy shareholders, with new full-year fiscal 2022 revenue guidance boosted by between $300 million and $800 million and comps projections rising between 0.5 and 1.5 percentage points.

Smart investors expected a slump following anticipated tough comparisons, but Best Buy is positioning itself well for the future. If the holidays go as well as planned, then today's drop in the stock might become the buying opportunity investors have waited to see.

Dan Caplinger has no position in any of the stocks mentioned. The Motley Fool owns shares of and recommends Best Buy. The Motley Fool has a disclosure policy.

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