RIVN - Li Auto: Weakening Financials Encourage Caution

2024-07-02 16:20:25 ET

Summary

• Li Auto is among the worst performing big EV stocks year to date. But with its robust delivery data impressing investors recently, is it due for a pick up now?
• There are certainly positives to it, besides strong recent deliveries. These include continued healthy growth in China's EV market and insulation from tariff increases by the US and EU.
• But the challenges are too big to ignore. It missed revenue targets in Q1 2024 and growth is seen falling sharply in Q2, which can affect profits.
• As a result, it's hard to make a Buy case for Li Auto right now when its market multiples aren't bad at all.

These aren’t good times for electric vehicle [EV] stocks and China’s Li Auto ( LI ) is no exception. With a 49% fall year-to-date [YTD], it's actually one of the worst affected in comparison among the five biggest EV stocks by market capitalisation (see chart below). It has also seen a far bigger decline than the 13.1% for the S&P Kensho Electric Vehicles Index. ...

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