LI - Li Auto's Strategic Pivot: From Setbacks To Solutions

2024-05-16 02:46:50 ET

Summary

• Li Auto's stock declined after hitting a 52-week-high due to concerns about competition in the new energy vehicle industry and negative consumer reaction to its new electric vehicle model.
• LI has taken steps to address these issues, and investors should consider buying additional shares at the current price.
• The Company's REEVs outperform BEVs and PHEVs, with lower structural costs and higher profits per unit, giving the company a competitive edge.
• Li's REEV benefits from reduced reliance on costly batteries and partnerships with suppliers like CATL, leading to lower maintenance costs for customers and bolstering its appeal in the upscale Chinese.
• With growth potential and favorable risk assessment, current price levels present an attractive opportunity for investors, supported by both DCF and comparable analysis.

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Investment Thesis

Li Auto's ( LI ) stock had a sharp decline a few days after hitting a 52-week high because of solid earnings. On the other hand, the market was worried about the intensifying competition in the new energy vehicle industry. Furthermore, Li's error with the Mega model also contributed to the selloff. However, in my opinion, Li has, nevertheless, made the necessary steps to ensure that it gets back on course....

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