After a solid summer rally, the stock market gave back some ground on Monday. However, the mood on Wall Street looked a little bit better on Tuesday morning, as many investors waited patiently to see what the Federal Reserve would discuss about its future monetary policy at its symposium later this week. As of 8:45 a.m. ET, futures contracts on the Dow Jones Industrial Average (^DJI 0.12%) had risen 25 points to 33,081. S&P 500 (^GSPC 0.52%) futures had picked up 4 points to 4,145, and Nasdaq Composite (^IXIC 0.90%) futures had gained 20 points to 12,930.
The electric vehicle space has gotten a lot of attention lately, and EV stocks have gotten a ton of interest from investors in recent years. That makes financial reports from top players in the industry important, and this morning's news from Chinese EV company XPeng (XPEV 8.02%) dampened enthusiasm about the state of the industry. However, a stock from the biotech space, Aerie Pharmaceuticals (AERI), looked poised to be the big winner of the day. Below, you'll learn more about both companies and their future prospects.
Revving down at XPeng?
Shares of XPeng were down between 4% and 5% in premarket trading on Tuesday morning. The Chinese EV company reported second-quarter financial results that didn't live up to the high expectations shareholders have had of the electric vehicle maker.
At first glance, XPeng's numbers didn't look all that bad. Quarterly revenue came in at 7.43 billion Chinese renminbi ($1.1 billion), nearly double the figure from the year-ago quarter. Vehicle deliveries of 34,422 for the period were up 98% year over year. However, the more recent trends for XPeng have been less favorable. The report marked the second quarter in a row that vehicle deliveries fell from the prior three months, after having peaked at 41,751 in the fourth quarter of 2021.
More troublingly, losses ballooned as vehicle margin figures fell sharply. Even after adjusting for share-based compensation, XPeng lost $368 million in the second quarter of 2022, more than double its loss from the previous year's period.
The worst news came from XPeng's future guidance. The company expects deliveries in the third quarter to fall to between 29,000 and 31,000. That would still be a year-over-year increase, but the further sequential weakness suggests that economic conditions in China are deteriorating. Similarly, revenue of between 6.8 billion and 7.2 billion renminbi aren't making growth investors particularly happy.
Aerie soars on takeover interest
The big gainer in the premarket session was Aerie Pharmaceuticals, which saw its stock launch 36% higher Tuesday morning. The move came as a key player in treatments for eye diseases announced its plans to buy out Aerie and expand its pipeline.
Alcon (ALC -1.33%) and Aerie announced that Alcon would acquire Aerie in a deal worth roughly $770 million. Under the terms of the proposed deal, Alcon would pay Aerie shareholders $15.25 per share in cash.
With the acquisition, Alcon intends to bolster its ophthalmic pharmaceutical scope. Aerie already has two commercially available treatments, Rocklatan and Rhopressa. It also has a phase 3 candidate for dry eye disease, along with a more extensive pipeline of eye-related products at the clinical and pre-clinical stages of research.
Alcon's previous acquisitions of commercial rights for eye-related drugs from Novartis and Kala Pharmaceuticals had given it exposure to the eye treatment arena. However, buying Aerie is a much bigger commitment.
For Aerie shareholders, the move is bittersweet. Despite the big jump today, Aerie shares traded above $60 as recently as 2018, and so the exit from the public arena won't necessarily leave long-term investors with good memories of the stock's performance.