Shares of Chinese electric vehicle manufacturer Li Auto (NASDAQ:LI) are up nearly 10% this morning after impressive earnings and delivery beats.
The Beijing-based company reported that its third-quarter sales rose nearly 200% from a year earlier, handily beating analysts’ estimates and sending its share price sharply higher in today’s pre-market session. The move upwards is welcome as LI stock is essentially flat on the year prior to today. On Friday, the company’s shares closed at $32.40, up a slight 0.18% year-to-date.
What Happened With LI Stock
Li Auto reported that its deliveries in the third quarter totaled 25,116 vehicles, a 190% year-over-year increase. At the end of September, Li Auto had 153 retail stores in 85 cities across China. Additionally, Li Auto has 223 service centers and body and paint shops in 165 Chinese cities. While not well-known outside its home market, Li Auto is fast becoming a leading electric vehicle maker within China.
In terms of financials, Li Auto’s vehicle sales totaled $1.15 billion in the third quarter, a rise of 199.7% from a year earlier and up 50.6% from the second quarter of 2021. Revenues amounted to $1.21 billion in the third quarter, an increase of 209.7% from the year-ago quarter and an increase of 54.3% from this year’s Q2.
Li Auto’s gross profit was $281.2 million in the third quarter, representing an increase of 264.8% YOY, and the company’s gross margin was 23.3% in Q3 compared with 19.8% in 2020. Li Auto reported a third-quarter loss of $15.2 million, a decrease of 45.7% from Q3 2020.
Why It Matters
The stellar financial results demonstrate that Li Auto is emerging as a leading electric vehicle manufacturer within China. More specifically, it shows it is competing strongly against domestic incumbents such as Nio (NYSE:NIO) and Xpeng (NYSE:XPEV). More broadly, the strong quarterly results and sales figures are drawing investor attention to Li Auto within the U.S. and elsewhere outside China, bringing fresh capital to the company.
Today’s jump in LI stock could also help to keep the broader rally in the EV sector humming along. Stocks of all electric vehicle makers have been red hot since Rivian Automotive (NASDAQ:RIVN) held its highly anticipated initial public offering (IPO). While shares of EV makers fell at the end of last week along with the entire market, they could rebound today, encouraged by Li Auto’s strong data.
What’s Next for Li Auto
Shareholders of Li Auto are going to be rewarded for the company’s stellar Q3.
LI stock should run higher in the near term. Moving forward, the company will need to string together several quarters of better-than-expected financial results to keep its stock buoyant. Time will tell. But meanwhile, today’s showing is a step in the right direction for Li Auto as it moves up the ranks of Chinese electric vehicle manufacturers.
On the date of publication, Joel Baglole 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.
