Xos: The Best Margin in Company History — Earned With Almost No Trucks

There is an investor trap that springs shut precisely when you are being careful: the share-of-the-pie trap. It works like this. Somebody tells you their slice grew from 12 percent to 31 percent. Your brain hears more pie. It does not hear the second possibility — that the pie got smaller. Percentages are ratios, and a ratio can improve simply because the base collapsed. On August 13, 2026, California truck maker Xos, Inc. (Nasdaq: XOS) reported exactly such a number: the highest first-half gross margin in its history, 31.0 percent versus 11.8 percent a year earlier. That sounds like a turning point. The same report shows that Xos delivered 30 units in the second quarter instead of 135, and that revenue fell from $18.4 million to $4.7 million. So let us make a deal. Before you form a view on this stock, we will read together what Xos itself told the U.S. securities regulator, the SEC — the quarterly report (10-Q) for June 30, 2026, the annual report (10-K) for 2025, and everything filed since. An SEC filing is submitted under threat of penalty. And this one contains a sentence no press release can smile away. What you do with it is your call.

What Xos Actually Builds — Delivery Vans, Powertrains and a Battery in a Container

Xos, Inc. operates out of an 85,142-square-foot facility in Los Angeles and has three product lines. First, the vehicles: battery-electric commercial vehicles in U.S. weight Classes 5 through 8, built for routes of up to roughly 200 miles a day that end back at the depot every evening. The core product is the stepvan — the boxy delivery truck familiar from parcel fleets, with standing room in the cargo area. Alongside it sits the stripped chassis, the bare frame and drivetrain onto which another manufacturer bolts its own body. Second, the powertrains sold under the Powered by Xos brand: batteries, controls, traction motors and auxiliary drives, sold to other vehicle builders. The 2025 annual report names the most important customer outright:

"Blue Bird Corporation ("Blue Bird"), the leading alternative fuel school bus manufacturer in the United States, is a key Powered by Xos customer. Blue Bird has ordered over 100 powertrain units between the second quarter of 2025 and the first quarter of 2026, inclusive, for a variety of its school bus configurations."

— Xos, Inc., SEC annual report 10-K for 2025, Item 1 Business

We looked at that customer separately in our Blue Bird stock analysis. Third comes the energy side, branded Xos Energy Solutions: the Xos Hub, essentially a large battery on wheels or inside a shipping container that supplies power and charges vehicles where no strong grid connection exists. On top of that sits the fleet software Xosphere.

The listing history is typical of its vintage. Xos did not reach Nasdaq through a conventional initial public offering but through a SPAC shell — an already-listed empty company that absorbs a real business. The shell was called NextGen Acquisition Corporation and the combination closed on August 20, 2021. On December 6, 2023 came a 1-for-30 reverse stock split: thirty shares became one. Companies do that when the price has fallen far enough to threaten the listing; for investors it means old charts mislead unless they are adjusted. As of December 31, 2025, Xos employed 101 people (99 of them full time) plus 34 contractors, down from 114 employees and up from 16 contractors a year earlier. That sets up the central tension of this analysis, and it runs through every chapter: Xos gets operationally leaner every quarter — while selling less and less of what the company actually builds.

How This Stock Landed on Our Desk

Xos is not a hit from our value or momentum filters. It reached the research list through the Reddit mention scanner — the part of our in-house stock scanner that counts what retail forums are talking about (as of September 9, 2026). That is deliberately a different filter from "cheap" or "in an uptrend": it measures attention, not quality. And Xos had plenty of attention in the summer of 2026. You can read it straight off the insider filings, because every sale price has to be disclosed there. One director sold at $2.1485 on July 17, 2026, at $3.4913 on August 20, 2026 and at $3.00 on September 4, 2026; another sold at $4.1945 on August 18. So between mid-July and mid-August the share price nearly doubled — coinciding with the August 13, 2026 release that put the record margin in the headline. It then gave back a good quarter of that, from $4.1945 on August 18 to $3.00 on September 4, with no new figure-bearing filing in between. Note the finding right at the start: at this size of company, the story moves the price faster than the business does. Which makes what the filings say all the more important.

The Numbers Over the Years — Credit Where It Is Due

First the part that genuinely speaks for Xos, and it is more than the headline suggests. Xos turned a start-up with $5.0 million of annual revenue in 2021 into a company with $56.0 million in 2024. That is real industrial work: certifying vehicles, building supply chains, winning customers. And the cost discipline of the past two years is demonstrable rather than asserted. Operating expenses fell from $49.8 million in 2024 to $35.8 million in 2025, down 28 percent, and again in the first half of 2026 to $17.5 million from $19.2 million. The net loss halved from $50.2 million in 2024 to $25.3 million in 2025 and came in at $11.8 million in the first half of 2026 versus $17.6 million. Cash burn looks better still than the reported loss: net cash used in operating activities was only $4.3 million in the first half of 2026, because inventories and receivables were converted into cash. That source dries up once the warehouse is empty.

The 2025 dip has an obvious cause, and Xos names it in the annual report itself: the U.S. federal subsidy for electric commercial vehicles has expired. The filing states that the act signed on July 4, 2025 made the applicable credits "no longer available for vehicles not acquired or placed in service on or before September 30, 2025." A fleet operator who wanted an electric delivery van therefore had a very concrete reason to buy it before that cut-off date — and none afterwards. That also explains why the second quarter of 2025, with 135 units delivered, was so strong. And it explains why any comparison against that quarter looks brutal. Pulling demand forward is entirely legitimate, but it is not a trend either. Which brings us to the uncomfortable truths.

What the Filings Say — the Uncomfortable Truths

Uncomfortable Truth No. 1: The Report Names Chapter 7 and 11

The order matters here: everything that follows — margin, product mix, guidance — sits underneath this one sentence. In the notes to the quarterly report for June 30, 2026, Xos writes that its resources are not expected to last twelve months from the report's issuance and that management's plans do not resolve that doubt. Then comes the consequence, in plain language:

"Absent the Company being able to collect on its outstanding accounts receivable, obtain a sufficient level of new capital in the near-term and/or obtain replacement financing for, or further extend the maturity of, existing debt, the Company could be required to seek protection under Chapters 7 or 11 of the United States Bankruptcy Code. This could potentially cause the Company to cease operations."

— Xos, Inc., SEC quarterly report 10-Q for June 30, 2026, Note 1 (going concern)

The numbers behind it are quickly told. Cash stood at $13.2 million on June 30, 2026 (December 31, 2025: $14.0 million; March 31, 2026: $9.8 million). The accumulated deficit since inception is $239.9 million. The convertible note owed to Saudi vehicle distributor Aljomaih Automotive Co. stands at $15.5 million, of which $7.5 million is due within twelve months. Do the arithmetic yourself: $13.2 million of cash, a $7.5 million current note installment, $4.3 million of operating cash burn in the first half. In everyday terms this is a household budget that still balances — but only as long as nothing unexpected happens and as long as inventory and receivables keep converting into cash. Which is exactly why that sentence sits near the front of the report.

Uncomfortable Truth No. 2: The Truck Maker Barely Sells Trucks Anymore

Now to the substance behind the record margin. The quarterly report breaks revenue out by product line, and this single table explains the whole company:

For scale: $0.581 million of vehicle revenue in a quarter, at prevailing prices for electric delivery vans, is a handful of trucks. A company whose name stands for trucks effectively stopped selling trucks in the spring of 2026 — not by announcement, but in fact. Xos calls this a "strategic focus on powertrain and hubs production." That is not untrue: powertrains and hubs grew from $2.5 million to $12.6 million over the half year, and the powertrain sale to Blue Bird alone accounted for 63 units in the first quarter of 2026. But it is also the reframing of a collapse as a decision. Both are true at once, and for you as an investor the second one matters: the new revenue pillar is a supplier business with few buyers — and it is not yet large enough to replace the old one.

Uncomfortable Truth No. 3: The Record Margin and the Guidance Cut Sit in the Same Report

This is where the share-of-the-pie trap snaps shut. First-half 2026 gross margin came in at 31.0 percent versus 11.8 percent — the number in the headline of the release. In absolute terms it means $4.944 million of gross profit instead of $2.873 million. So gross profit really did grow, by a good two million dollars. It simply does not reach far enough: against it stand $17.5 million of operating expenses in the same half. And in the second quarter alone the margin was not a record at all but 12.1 percent — on $4.7 million of revenue that is $0.573 million of gross profit against $8.5 million of quarterly costs. The flattering half-year figure comes almost entirely from the first quarter (38.6 percent on $11.2 million of revenue). The rule to remember: a margin is a yield per dollar of revenue. It says nothing about how many dollars of revenue there are.

Then there is the outlook. On May 14, 2026 Xos explicitly maintained its full-year targets: $40 million to $50 million of revenue, 350 to 500 units delivered, a non-GAAP operating loss of $11.9 million to $13.3 million. Three months later, on August 13, 2026, the same lines read: $35 million to $43 million of revenue, 250 to 350 units, non-GAAP operating loss of $11.4 million to $14.7 million. The midpoint of the unit range fell from 425 to 300 — down 29 percent. Chief Executive Dakota Semler frames it this way: "Second-quarter deliveries shifted into later quarters — deferrals, not cancellations." Possible. It only becomes verifiable with the next report — and that is the figure that matters.

Uncomfortable Truth No. 4: Every Half Year Your Slice Gets Smaller

If you invest in a company without profits, you are helping to fund it. At Xos that can be quantified precisely. Shares outstanding rose from 11.403 million (December 31, 2025) to 14.146 million (June 30, 2026) and on to 14,217,852 as of August 7, 2026 — up 24 percent in a little over seven months. Dilution in everyday terms: your slice of the pie shrinks because new guests joined the table. Where the new shares came from is in the report: 378,700 shares went out through the at-the-market program at an average of $6.71 (net proceeds $2.2 million), and another 1,090,910 shares on June 4, 2026 in a registered direct offering to institutional investors at $5.50 (net proceeds $5.4 million). Both prices sit well above what the stock was worth two weeks later: the company's own prospectus supplement cites a last reported sale price of $3.385 on June 17, 2026, after quoting $7.46 for June 3.

The second lever is the convertible note. On May 8, 2026 Xos and Aljomaih agreed a restatement whose core the 8-K of May 13, 2026 describes verbatim:

"The Third A&R Note altered the convertible promissory note issued by the Company to Aljomaih on August 11, 2022, in an original principal amount of $20 million … to reduce the conversion price from $71.451 per share … to $12.00 per share of Common Stock."

— Xos, Inc., SEC filing 8-K of May 13, 2026, Item 1.01

What that means for you: at the old conversion price the remaining $15.5 million of principal (as of June 30, 2026) would have produced roughly 217,000 new shares; at the new one it is roughly 1.29 million, or a good 9 percent of the share count as of August 7, 2026. On August 11, 2026 Xos repaid the scheduled $1.5 million instalment in cash; the principal has stood at $14.0 million since then, convertible into 1,166,666 shares — roughly 8 percent (Form 4 filed by Aljomaih Automotive Co. on August 26, 2026). The creditor was paid for the extension not in interest but in company. And the road ahead is already paved: a new shelf registration for up to $100 million became effective on June 22, 2026, and an at-the-market program for a further $8.8 million was set up under it on June 23, 2026.

Uncomfortable Truth No. 5: The Customer List Is Short — and It Rotates

One last detail that is easy to miss. In the second quarter of 2025, 70 percent of revenue came from a single customer; in the first half of 2025 it was 53 percent, again from one customer. A year later the spread is wider — four customers at 27, 15, 14 and 13 percent in the second quarter of 2026 — but that is not reassurance, it is a consequence of the smaller total: when the pie shrinks, the slices look more even. Receivables tell a similar story at June 30, 2026, with five customers at 19, 16, 15, 14 and 13 percent. What stands out is the balance itself: receivables fell from $26.9 million (December 31, 2024) via $6.0 million (December 31, 2025) to $4.5 million (June 30, 2026). That is good news at first glance — cash was collected, and that money is precisely what kept operating cash burn low. It is also a warning: the company names collecting receivables in the same report as one of three conditions for avoiding bankruptcy proceedings. That reserve is 83 percent used up.

Valuation: Roughly $43 Million for a Company With $13 Million in the Bank

How expensive is Xos? There is no price-to-earnings ratio — the company has not reported an annual profit since going public. That leaves the revenue comparison, and for once it is well documented, because both the share count and the price come from mandatory filings: 14,217,852 shares (10-Q cover page, as of August 7, 2026) times $3.00 (insider sale of September 4, 2026, Form 4) gives a market value of roughly $42.7 million. Against 2025 revenue of $46.0 million that is a price-to-sales ratio of about 0.9, and about 1.1 against the midpoint of the company's own 2026 outlook ($39 million). That sounds cheap — until you put the balance sheet next to it: the market value stands against $22.9 million of stockholders' equity (June 30, 2026), of which $23.5 million is inventory and only $13.2 million is cash. So the market is paying close to twice book value for a business that posted a $7.9 million operating loss in the second quarter of 2026 ($12.6 million for the first half).

One detail keeps the arithmetic clean: the 18,633,301 warrants left over from the SPAC era are no longer a dilution risk. They expired on August 20, 2026 with an exercise price of $345.00 per whole share (thirty warrants per share) — hopeless at a stock price around $3. Nasdaq removed them from listing on August 19, 2026 via Form 25-NSE. The common stock is unaffected and continues to trade on the Nasdaq Capital Market. Two sentences that belong together: one dilution risk fell away and a larger one took its place — the new $12.00 conversion price and the $100 million shelf.

Upside and Risks at a Glance

What speaks for Xos:

• Demonstrated cost discipline: operating expenses down from $49.8 million (2024) to $35.8 million (2025), and in the first half of 2026 to $17.5 million from $19.2 million; the net loss halved from $50.2 million to $25.3 million in 2025 and came in at $11.8 million versus $17.6 million in the first half of 2026.
• The margin gain is real, not just relative: $4.944 million of gross profit in the first half of 2026 against $2.873 million a year earlier — on lower revenue.
• The powertrain business is growing fast: from $2.522 million to $12.584 million half-year over half-year, with U.S. school bus maker Blue Bird named as a key customer (over 100 powertrains ordered between the second quarter of 2025 and the first quarter of 2026).
• The Xos Hub addresses a genuine bottleneck: the 2025 annual report names AI data centers and construction sites among its applications, and in the second quarter of 2026 a Hub supported a data center construction project according to the earnings release. More than 250 megawatt-hours of storage are deployed across North America.
• One dilution item is settled: the 18,633,301 SPAC warrants with a $345.00 exercise price expired worthless on August 20, 2026.

What speaks against it:

• The 10-Q for June 30, 2026 states substantial doubt about the company's ability to continue as a going concern and names proceedings under Chapters 7 or 11 as a possible outcome — with $13.2 million of cash and $7.5 million of current convertible debt.
• The core business is falling away: stepvans and vehicle incentives dropped from $17.087 million to $0.581 million in the second quarter, deliveries from 135 units to 30.
• On August 13, 2026 Xos cut its full-year outlook from 350 to 500 units down to 250 to 350, and from $40 million to $50 million of revenue down to $35 million to $43 million — three months after explicitly maintaining it.
• Dilution every half year: share count from 11.403 million to 14.146 million in six months, the note's conversion price cut from $71.451 to $12.00 (roughly 1.29 million potential new shares), plus a new shelf registration for up to $100 million.
• The U.S. federal credit for electric commercial vehicles expired on September 30, 2025; the demand pulled forward makes every year-over-year comparison harder and future volumes less certain.

A Human Conclusion

Back to the share-of-the-pie trap from the opening. Its core is not that the release was wrong — every figure of August 13, 2026 is accurate and appears the same way in the quarterly report filed with the SEC. Its core is that a percentage is a ratio, and that our brains stop asking "of what?" the moment they hear the word "record." 31.0 percent of $16.0 million is less money than 11.8 percent of $50 million would be. And the most honest sentence of the quarter is not in the release but in the notes to the report: that without fresh capital, bankruptcy proceedings are possible. None of that makes Xos a bad company — 101 people here are working on technology that is needed, they have brought costs under control and built a second leg that is growing. It makes Xos a company whose stock is a bet on the next twelve months, not on the next ten years. So the honest question for you is not "is a price-to-sales ratio of 0.9 cheap?" but: are you willing to fund a business that says itself the money is not expected to last twelve months — and that hands you a smaller slice with every financing round? If yes, you have a thesis. If no, you had a headline. What you do with it is your decision. And that is exactly as it should be.

Sources

Every original document used in this analysis, so you can read it yourself:

• Xos, Inc. — SEC quarterly report 10-Q for June 30, 2026 (filed August 13, 2026)
• Xos, Inc. — SEC quarterly report 10-Q for March 31, 2026 (filed May 14, 2026)
• Xos, Inc. — SEC annual report 10-K for 2025 (filed March 30, 2026)
• Xos, Inc. — Second-quarter 2026 earnings release, Exhibit 99.1 to the SEC filing 8-K of August 13, 2026 (with the lowered outlook)
• Xos, Inc. — First-quarter 2026 earnings release, Exhibit 99.1 to the SEC filing 8-K of May 14, 2026 (with the maintained outlook)
• Xos, Inc. — SEC filing 8-K of May 13, 2026, Item 1.01 (restated convertible note)
• Xos, Inc. — SEC prospectus supplement 424B5 of June 23, 2026 (at-the-market program, documented share prices)
• Nasdaq Stock Market LLC — SEC Form 25-NSE of August 19, 2026 (removal of the warrants that expired on August 20, 2026)
• Full SEC filing history of Xos, Inc. (CIK 0001819493), including the Form 4 insider filings of August 20, September 2 and September 4, 2026 and the Form 144 of September 2, 2026: EDGAR overview (sec.gov)
• Retail forum mentions: our in-house stock scanner, Reddit mention count, as of September 9, 2026.

Transparency & disclaimer: this analysis is journalistic commentary on publicly available information. It is not investment advice, not a regulated financial analysis and not a solicitation to buy or sell securities. Equity investments carry substantial risk up to and including total loss; at a company with a stated going-concern doubt that risk is especially pronounced. All information is provided without warranty; the as-of date for each figure is noted in the text. The author holds no position in Xos shares at the time of publication.