Why is Zhejiang Leapmotor Technology stock sliding today?

Zhejiang Leapmotor Technology shares experienced a significant 7.3% drop to HK$39.66 on Tuesday, despite delivering strong interim earnings. The Chinese electric vehicle manufacturer reported a 57% increase in H1 revenue and a profit surge over 530% year-over-year. However, the stock's decline was primarily driven by the company's announcement to reduce its full-year 2026 net profit guidance by around 40%.

This revision came amid mounting concerns over rising raw material costs and a substantial decline in gross margins, which fell from 14.1% in H1 2025 to 11.7% in H1 2026. The guidance cut overshadowed Leapmotor's otherwise impressive results, which included a record H1 delivery of 356,487 units, a 60.8% year-over-year increase, and overseas exports that more than quadrupled.

The company was already struggling from losses on Monday following the announcement of a recall of over 4 million vehicles in China due to safety concerns regarding car doors. The broader Hong Kong market also failed to provide much support, with the Hang Seng Index falling 0.3% on losses in the tech sector. This report was produced with the assistance of AI technology and has been thoroughly reviewed by an editor.