Key Takeaways:
Shares of Chinese electric-vehicle maker Leapmotor (09863.HK) plunged by as much as 10.4% after its chief executive said the company is focused on expanding its scale at the expense of short-term profits.
"Zhu Jiangming, Founder, Chairman, and CEO of Leapmotor, noted that the company currently leads in sales among new force carmakers... Zhu prioritizes at present business scale-up over earnings targets, since it is a matter of life and death," according to a report in The Paper.
The stock opened 2.1% lower on April 20 before sinking to a session low of HKD 51.05. It ended the day at HKD 53.75, a 5.6% loss, on turnover of HKD 1.248 billion. Short selling accounted for 17.25% of the volume, totaling $183.7 million.
The CEO's statement signals a strategy focused on capturing market share, which could mean a prolonged period of cash burn and delayed profitability. This approach may increase investor concern until the benefits of scaling become apparent.
Despite the sharp stock decline, Zhu highlighted the company's recent strong performance, noting it leads in sales among China's new force automakers. The strategic pivot to prioritize growth over earnings comes as competition in China's EV market continues to intensify, forcing companies to fight for market share.
This article is for informational purposes only and does not constitute investment advice.
