Shares of Li Auto (NASDAQ:LI) stock are in full focus after the Chinese electric vehicle (EV) company reported its earnings and announced a goal of becoming China’s top seller of premium vehicles by 2024, beating out Mercedes-Benz (OTCMKTS:MBGYY), BMW (OTCMKTS:BMWYY), and Volkswagen’s (OTCMKTS:VWAGY) Audi subsidiary.
The announcement was spurred by a fourth-quarter monthly delivery forecast of at least 40,000 vehicles, and the upcoming arrival of its first pure-battery electric model called the Mega. Li Auto has stated that the Mega will be released by the end of the year and that it expects it to become its top passenger car priced at RMB 500,000 or more. Additionally, the company has plans to release four new models next year.
LI Stock: Li Auto Discloses Ambitious Plans, Earnings
During the second quarter, Li Auto delivered a total of 86,533 vehicles, up by 201.6% year-over-year (YOY). That brought total vehicle sales to $3.86 billion, up by 229.7% YOY and 52.6% quarter-over-quarter. However, vehicle margins were 21%, showing a small decline from 21.2% a year ago. At the same time, gross margins rose slightly to 21.8% compared to 21.5%.
“We crossed the 30,000 monthly delivery milestone in June, closing the second quarter with an all-time high vehicle delivery, while all of the three Li L series models maintained sales leadership in their respective categories,” said CEO and Chairman Xiang Li. “These accomplishments solidified our standing as the preferred premium brand for families, firmly positioning us to achieve the revenue target of RMB100 billion in 2023.”
For guidance, the company expects third-quarter deliveries between 100,000 and 103,000 vehicles, which would represent a YOY increase between 277% and 288.3%. Revenue is forecasted to be between $4.46 billion and $4.59 billion, signaling growth between 246% and 256.4%.
Shares of LI stock fell sharply after the company reported its earnings, which Morgan Stanley attributed to weak third-quarter delivery guidance. That didn’t stop the investment bank from reiterating its “overweight” rating and price target of $53. Following earnings, Bank of America analyst Ming Hsun Lee reiterated his “buy” rating and raised his price target to $56 from $52, while Nomura/Instinet analyst Joel Ying initiated coverage of the company with a “buy” rating and a price target of $54.
On the date of publication, Eddie Pan did not hold (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.
