Investors one-year losses grow to 17% as the stock sheds CN¥2.0b this past week

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The simplest way to benefit from a rising market is to buy an index fund. While individual stocks can be big winners, plenty more fail to generate satisfactory returns. For example, the XPeng Inc. (NYSE:XPEV) share price is down 17% in the last year. That’s disappointing when you consider the market declined 8.4%. XPeng may have better days ahead, of course; we’ve only looked at a one year period. In the last ninety days we’ve seen the share price slide 40%. This could be related to the recent financial results – you can catch up on the most recent data by reading our company report.

With the stock having lost 9.5% in the past week, it’s worth taking a look at business performance and seeing if there’s any red flags.

View our latest analysis for XPeng

XPeng wasn’t profitable in the last twelve months, it is unlikely we’ll see a strong correlation between its share price and its earnings per share (EPS). Arguably revenue is our next best option. When a company doesn’t make profits, we’d generally expect to see good revenue growth. That’s because it’s hard to be confident a company will be sustainable if revenue growth is negligible, and it never makes a profit.

In the last twelve months, XPeng increased its revenue by 259%. That’s well above most other pre-profit companies. The share price drop of 17% over twelve months would be considered disappointing by many, so you might argue the company is getting little credit for its impressive revenue growth. On the bright side, if this company is moving profits in the right direction, top-line growth like that could be an opportunity. Our brains have evolved to think in linear fashion, so there’s value in learning to recognize exponential growth. We are, in some ways, simply the wisest of the monkeys.

The image below shows how earnings and revenue have tracked over time (if you click on the image you can see greater detail).

earnings-and-revenue-growth

XPeng is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. Given we have quite a good number of analyst forecasts, it might be well worth checking out this free chart depicting consensus estimates.

A Different Perspective

We doubt XPeng shareholders are happy with the loss of 17% over twelve months. That falls short of the market, which lost 8.4%. That’s disappointing, but it’s worth keeping in mind that the market-wide selling wouldn’t have helped. It’s worth noting that the last three months did the real damage, with a 40% decline. This probably signals that the business has recently disappointed shareholders – it will take time to win them back. It’s always interesting to track share price performance over the longer term. But to understand XPeng better, we need to consider many other factors. For instance, we’ve identified 2 warning signs for XPeng that you should be aware of.

Of course, you might find a fantastic investment by looking elsewhere. So take a peek at this free list of companies we expect will grow earnings.

Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.