Does large-cap Auto Manufacturers company XPeng have a sustainably profitable business model? By studying its gross margins and comparing them to its operating margins, we can gain insight into quality of its business. With gross margins at 12.7%, you might be telling yourself the XPeng is profitable — but there could be more to the story.
| Date Reported | Revenue ($) | Cost of Revenue ($) | Gross Margins (%) | YoY Growth (%) |
|---|---|---|---|---|
| 2021-12-31 | 20,988,131,000 | 18,330,987,000 | 12.66 | 124.87 |
| 2020-12-31 | 5,844,321,000 | 5,515,081,000 | 5.63 | 127.29 |
| 2019-12-31 | 2,321,219,000 | 2,800,175,000 | -20.63 | 15.21 |
| 2018-12-31 | 9,706,000 | 12,067,000 | -24.33 | n/a |
By reviewing several years of XPeng's income statemet, we can see that, although gross margins are currently positive, the company has on average lost money on each of its sales with an average gross margin of -6.7%. Cost of revenue has been changing at a rate of 11829.9%, while its revenues have a growth rate of 8075.4%. As a result, gross margins have a delta of 89.1%.
| Date Reported | Total Revenue ($) | Operating Expenses ($) | Operating Margins (%) | YoY Growth (%) |
|---|---|---|---|---|
| 2021-12-31 | 20,988,131,000 | 27,665,803,000 | -31.82 | 56.04 |
| 2020-12-31 | 5,844,321,000 | 10,074,806,000 | -72.39 | 54.6 |
| 2019-12-31 | 2,321,219,000 | 6,022,608,000 | -159.46 | 99.09 |
| 2018-12-31 | 9,706,000 | 1,704,340,000 | -17459.7 | n/a |
The table above tells us that, on average, XPeng has not been profitable over the last four years, which should be a warning sign to prospective investors. One bright spot, however, is that the company's operating margins are growing at an average yearly rate of 69.9%.
