Chinese electric vehicle (EV) start-up Li Auto (NASDAQ:LI) certainly isn’t a darling of the markets. Indeed, if we were to judge the company simply based on the price action of LI stock, we might assume that Li Auto isn’t executing on its objectives at all.
The thing is, stock prices don’t always reflect the true value of a company. Sometimes, there’s a mismatch between asset prices and a company’s potential — and that’s when great investment opportunities arise.
Is LI stock one of those opportunities? Suffice it to say that the share price has been beaten down even while Li Auto continues to deliver — literally.
So, with that in mind, let’s delve into the technical aspects of this stock and see if there’s really a bargain here.
A Closer Look at LI Stock
Let’s rewind the clock for a moment. In July of 2020, Li Auto priced its initial public offering (IPO) at $11.50 per American depositary share. That’s higher than the previously proposed price range of $8 to $10.
This was a time when the market’s mania over electric vehicle stocks was really starting to heat up. Thus, LI stock jumped to around $23 in August. But it got even wilder after that. Amazingly, the stock rallied to a 52-week high of $47.70 on Nov. 24.
Generally speaking, it’s not my favorite strategy to buy a stock after a fast, vertical price move. However, not everyone follows this cautionary principle.
Folks who bought LI in late November were harshly punished as the share price declined in December and throughout the first quarter of 2021. By May of this year, the stock was below the $20 level.
Is this a sign of disaster, though? Or an excellent buying opportunity? As usual, we’ll use the data — rather than the market’s mania — to determine whether LI stock deserves a buy signal now.
One Good Month Deserves Another
Back in April, I reported on Li Auto’s delivery update for March and what it meant for LI stock.
The company’s flagship electric SUV, known as the Li ONE, was apparently selling like hot cakes. For the month, the automaker delivered 4,900 Li ONEs.
On a year-over-year (YOY) basis, that represented a nearly 239% increase. With that, Li Auto’s growth story started to remind me of Nio (NYSE:NIO) and that company’s rapid improvement in delivery figures.
Fast-forward to mid-May and it’s time for Li Auto to issue its delivery data for April. Of course, there was (and still is) a chip shortage going on. The question became whether Li could weather the chip crisis.
Fortunately, it appears the company is still firing on all cylinders despite the industry headwinds. Reportedly, Li Auto delivered 5,539 Li ONEs in April. This translates to a 113% YOY increase.
The Fastest Record, Maybe
Okay, so April’s 113% YOY increase in Li ONE deliveries isn’t quite as headline-grabbing as March’s well-over 200% increase. But, let’s not get so desensitized to a triple-digit jump here. The feat is still impressive — 113% is pretty amazing.
And if you’re into numbers with lots of zeros, then you should enjoy this next tidbit; according to Li Auto, the company achieved the 50,000 unit milestone for deliveries “in just 17 months after the launch of the first LI ONE back in December 2019.”
To be precise, Li’s total deliveries now come to 51,575 vehicle deliveries. Plus, boldly but perhaps accurately, Li Auto claims that this quick-hit milestone marks the “fastest record among all new energy vehicle companies.”
I invite any sleuths out there to verify or refute that claim. But, even if it’s not necessarily the “fastest record,” you have to admit that this achievement is still pretty darned fast. That’s a great thing for LI stock.
The Bottom Line on LI Stock
It’s hard to find a lot of enthusiastic LI stock bulls out there right now. The sentiment, it seems, is decidedly bearish.
However, this feeling stands in stark contrast to the company’s outstanding vehicle delivery stats.
Sooner or later, the market should recognize Li Auto’s true value. Hopefully, this will also be more accurately reflected in the stock’s share price.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
David Moadel has provided compelling content – and crossed the occasional line – on behalf of Crush the Street, Market Realist, TalkMarkets, Finom Group, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.