Shares of NIO traded up ~21% on Wednesday following news that China could ease its COVID lockdown restrictions soon. NIO is a leading manufacturer of electric vehicles in China. Consistent with the “common prosperity” framework, its gross margin structure is low as it aims to proliferate electric transportation throughout China.
Shares of Xpeng traded up ~47% on Wednesday after the company reported positive earnings, including margins that improved ~260 basis points sequentially and news that China soon could ease its COVID lockdown rules. Despite losing share this year, management is confident that Xpeng will gain share next year with the introduction of new models. Based in China, Xpeng designs, develops, and manufactures smart electric vehicles.
Shares of Farfetch traded down ~35% on Thursday after the company held its first Capital Markets Day and provided guidance through 2025. This year, management expects total gross merchandise volume (GMV) to grow 21% year-over-year, the midpoint in its GMV guidance. According to management, total GMV will grow at a compound annual rate of 35% from 2022 to 2025. Investors reacted negatively to management's expectations that GMV in Farfetch’s core marketplace segment will grow only 9% at a compound annual rate from 2022 to 2025. In our view, the guidance was conservative based on macroeconomic conditions––including Russia’s invasion of Ukraine and COVID disruptions in China. We also appreciate that Farfetch's marketplace is only one of the company’s opportunities, which include its Platform Solutions B2B offering and its Media Solutions advertising offering. Farfetch operates online and physical marketplaces for luxury retail goods internationally, as well as back-end technology solutions for third-party retailers.