Li Auto’s Strong Fourth-Quarter Earnings and Upcoming Models Boost Stock Performance

Li Auto, a leading Chinese electric vehicle (EV) maker, reported impressive fourth-quarter earnings on February 26, 2024, which significantly contributed to the stock’s surge in the market. The company’s earnings exceeded analysts’ expectations, with earnings per ADS coming in at 93 cents, up 615% year-over-year, and revenue reaching $5.88 billion, a 130% increase from the previous year.

Li Auto’s strong earnings report was accompanied by robust vehicle sales. The company delivered a record 131,805 vehicles in the fourth quarter, with its cheapest EV, the L7, accounting for 40% of the total sales. Despite guiding somewhat lower on Q1 revenue and deliveries, Li Auto stock still experienced a notable increase in early market trading.

The EV market in China has been growing rapidly, and Li Auto’s strong performance is a testament to the company’s success in this sector. However, the market tends to be weak in January and February, with sales typically peaking at year-end. Li Auto, along with other Chinese EV makers such as XPeng and Nio, will report February sales on March 1.

Li Auto’s upcoming models are also generating excitement among investors. On March 1, the company will formally launch its first fully battery electric vehicle (BEV), the Mega MPV, or minivan. The electric minivan segment is becoming increasingly crowded, with the Li Mega joining the less expensive XPeng X9 and BYD’s Denza D9. Li Auto also plans to unveil the 2024 versions of the L7, L8, and L9 on March 1 and the L6, its first model below RMB 300,000, in April. The automaker also intends to launch three more BEV models in the second half of 2024.

Li Auto stock jumped 10% in early market trading following the earnings report. Despite a 7% decline in 2024 year-to-date as of February 23, the stock has rebounded strongly since hitting a seven-month low of 26.43 on January 22. Aggressive investors may consider starting a position based on a strong post-earnings move above the 200-day moving average or using a trendline entry around 37.50.

Li Auto’s stock performance is outperforming other EV stocks, including Nio, XPeng, and Tesla, which are all trading near multimonth lows. Rivian also experienced a significant decline last week. BYD, a major EV and battery manufacturer, formally launched its Yangwang U9 supercar on Sunday with a $236,000 price tag and reported strong orders for the new, cheaper Honor variant of its entry-level Qin+ sedan.

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In conclusion, Li Auto’s strong fourth-quarter earnings report and upcoming models have significantly boosted the stock’s performance in the market. Despite some weakness in the EV sector, Li Auto’s success in the Chinese market and its innovative new models position the company for continued growth. Investors interested in the stock market and the EV sector can stay informed and updated by following Li Auto and other companies through IBD’s various resources and tools.