Li Auto Inc ADR (LI)

Li Auto (LI) stock tumbled by 5.57%, as investors showed reluctance towards the electric vehicle (EV) manufacturer. The current decline is attributed to two key factors that are causing concern among investors:

• Price Reductions on Li Auto Vehicles: One significant factor contributing to the sell-off is Li Auto's decision to slash prices on five of its EV models. The price cuts range from approximately $2,500 to $4,100 on models like Li L7, Li L8, Li L9, and Li MEGA. Customers who purchased these vehicles earlier in 2024 will receive refunds. This move is seen as an attempt by Li Auto to stay competitive in the Chinese EV market, where other manufacturers like Tesla and BYD have also recently reduced prices on their vehicles.
• Analyst Downgrade and Lower Price Target: Another reason for investor unease is an analyst downgrade from Citigroup, which has reduced Li Auto's price target from $48.50 to $43.60. While Citigroup maintains a buy rating on the stock, it cites concerns about Li Auto's L6 orders and the ongoing impact of Tesla's price reductions on the EV market.
• Implications for Investors: Given the current price war and the lowered price target from Citigroup, it's understandable why investors are cautious about Li Auto stock. Those considering investing in Li Auto may want to wait for more stability in the market and observe how the price cuts affect the company's financial performance. In the meantime, there are numerous other EV stocks available for investors to consider.

Li Auto (LI) stock declined by 7.48% due to concerns surrounding the company's updated projections for electric vehicle (EV) production. Despite impressive 2023 accomplishments, including significant sales growth and profits, Li Auto's outlook for 2024 disappointed investors. Management projected sales of 100,000 to 103,000 EVs for Q1 2024, a slowdown from the previous quarter's sales of 131,805 units.

• Reasons for Decline: The decline in Li Auto's stock price was attributed to lower-than-expected order intake, leading to revised Q1 delivery estimates of 76,000 to 78,000 electric vehicles, a 26% decrease from initial projections. This rapid rollback in volume predictions surprised investors, who had expected more robust growth.
• Challenges and Strategy: Li Auto faced challenges in ramping up production of its high-priced MEGA all-electric car, as it transitioned from building "extended-range" EVs to pure battery electric vehicles. CEO Xiang Li acknowledged the company's mistake and plans to focus on introducing MEGA to wealthier cities and existing hybrid customers to build a reputation in all-electric vehicles.

Li Auto Inc (LI) stock dropped by 12.23% due to a downgrade by Bank of America. The stock was down, reflecting investor reaction to the downgrade and the revised outlook for the company.

• Bank of America's Downgrade and Rationale: Bank of America Securities downgraded Li Auto in a note to clients, reducing its per-share price target to $55 from $60 while maintaining its buy rating on the stock. The downgrade was driven by Bank of America's revised volume sales estimates for Li Auto, which were lowered by 6% and 4% for 2024 and 2025, respectively. This downward revision was attributed to lighter-than-expected new orders for the MEGA Multi-Purpose Vehicle model.
• Impact on Financial Estimates: As a result of the volume sales adjustments, Bank of America also reduced its net income estimates for Li Auto by 9% and 7% for this year and next, respectively. The firm pointed to lower entry-level prices and higher discounts on Li's 2024 L-series models following the recent launch of redesigned Li L7, L8, and L9 models as additional factors contributing to its downgrade.
• Investor Concerns and Future Outlook: The downgrade by Bank of America has raised concerns among investors about Li Auto's future sales and profitability, particularly in the competitive Chinese EV market. The downward revision in sales and income estimates indicates potential challenges for the company in meeting its targets and maintaining its growth trajectory.

Li Auto Inc (LI) stock declined by 13.64%, marking its largest single-day percentage drop since October 2022. Analysts attribute this sharp decline to profit-taking following substantial gains last week, as well as some consumer disappointment with the company's newest model.

• Reasons for the Decline: The selloff occurred after Li Auto launched its first full-electric model, MEGA, priced at 559,800 yuan (US$77,785) - slightly higher than analysts' expectations. Feedback from investors on the MEGA launch event was mixed, particularly regarding pricing and interior design. Additionally, order numbers for the MEGA over the weekend are expected to be weaker than anticipated.
• Impact on Sales and Competition: Li Auto reported delivering 20,251 vehicles in February, a 22% increase from the previous year but significantly lower than January figures. Its competitor Seres, backed by Huawei, outsold Li Auto for the second consecutive month in the SUV market within the same hybrid space.

Li Auto Inc (LI) stock declined by 5.10% due to the company's announcement of its February delivery numbers, which showed a decline in deliveries compared to January 2024 and lower-than-expected year-over-year growth. This decline comes after a strong week for Li Auto, during which its stock climbed as much as 33% following the release of powerful Q4 earnings.

• 2023 Performance: In 2023, Li Auto delivered impressive results, with sales surging 173.5% year over year to $17.4 billion. Gross profit margins expanded to 22.2%, and free cash flow grew significantly to $6.2 billion. The company also reported a net income of $1.7 billion, compared to a loss in 2022.
• 2024 Outlook: However, despite its strong performance in 2023, Li Auto ended its earnings report with a warning about 2024. Management anticipated 90%-plus sales growth in Q1 2024 compared to Q1 2023 but expected a decline in car deliveries and revenues compared to the fantastic numbers reported in Q4 2023.
• Long-Term Outlook: While one month's data does not necessarily reflect long-term performance, investors are cautious about Li Auto's outlook for 2024, especially considering the lower-than-expected February deliveries. It remains to be seen how Li Auto will navigate these challenges and whether it can maintain its growth trajectory in the coming months.

Li Auto Inc ADR (LI) stock dropped by 7.59% due to concerns over its sales growth rate in December, which had slowed compared to previous periods, in addition, investors were cautious about the company's financial performance as well as other factors. Here are the key highlights:

• Financial Performance: Li Auto reported meeting its December sales target, delivering more electric vehicles (EVs) than anticipated. However, the year-over-year growth rate of 137% in December was viewed as a deceleration compared to the stronger growth in the fourth quarter and for the entire year.
• Valuation and Profitability: Despite a relatively high valuation compared to some competitors, Li Auto stands out as a profitable operation, having earned $6.3 billion in net income over the past 12 months. Some investors believe the stock should not be punished as severely as others in the EV sector
• Different Factors at Play: Li Auto's stock decline is linked to concerns about its sales growth rate, while Freyr's stock performed well due to its strategic move and potential government incentives. These contrasting situations reflect the various dynamics affecting the EV sector.

Shares of Li Auto (LI) cratered 9.98% as competition heated up in China's domestic electric-vehicle (EV) industry. The South China Morning Post reported that Chinese cellphone giant Huawei is getting into the electric-car space with a new S7 electric sedan built jointly with local automotive company Chery Automobile.

https://www.fool.com/investing/2023/09/25/why-li-auto-stock-sank-10-on-monday/