China-based stocks had a rough start to 2024. Plus, some investors are concerned about slowing demand for electric vehicles (EVs). Yet, there’s no need to worry about Li Auto (NASDAQ:LI). Granted, a Li auto stock analysis shows it’s down from its peak price. However, that’s just an opportunity for folks who appreciate Li Auto’s comeback prospects.
Sure, automakers like Li Auto and Nio (NYSE:NIO) will probably benefit from stimulus programs in China. Yet, that’s not the only reason to consider buying Li Auto stock. Just wait until you hear about Li Auto’s vehicle-delivery objective for this year. With that information in hand, you’ll surely be tempted to grab a few shares before the price makes a big move.
Why LI Stock Ought to Be Much Higher
Not long ago, LI stock sank to its lowest price since the summer of 2023. To a certain extent, this wasn’t Li Auto’s fault. Certainly, the company can’t be blamed for China’s economic issues or tepid EV demand.
If these problems get resolved, Li Auto will certainly benefit from that. Yet, profit-seeking investors probably won’t have to wait around for the extrinsic issues to be resolved. Indeed, there are multiple company-specific reasons that Li Auto stock really ought to be higher than it is.
First of all, Li Auto is a consistently profitable business. Also, InvestorPlace contributor Larry Ramer observed that Li Auto sells many more EVs in China than Tesla (NASDAQ:TSLA) does. Furthermore, Li Auto has a partnership with the almighty Nvidia (NASDAQ:NVDA) in which Nvidia’s Drive Thor autonomous driving chip will power Li Auto’s ET9 electric sedan.
Additionally, Li Auto is gearing up to launch its flagship multi-purpose vehicle, known as the Li MEGA, on March 1. Moreover, Li Auto Senior Vice President Zou Liangjun recently declared that the “Li L7, Li L8, and Li L9 should sell at least 400,000 units in 2024.” That’s ambitious, as it would exceed Li Auto’s total of 376,030 vehicles sold in 2023.
Li Auto Borrows a Smart Concept From Nio
Even if Li Auto might strive to innovate in some ways, it’s perfectly fine if the company borrows good ideas from its competitors. A prime example would be a concept that Li Auto seems to be taking from Nio.
You may have heard of Nio’s flagship showroom, known as Nio House. It’s basically a fancy vehicle showroom that, on the inside, looks like somebody’s home. You might even be tempted to take your family to Nio House, sit in a comfy chair and just spend the day there.
It’s a concept which, I believe, makes sense in the modern age of vehicle sales. If you agree, then I encourage you to check out some photos of Li Auto’s flagship retail centers in Guangzhou and Shenzhen, China.
Nio reportedly had over 140 Nio House locations across multiple countries by the end of last year. So, Li Auto has some catching up to do. It will require time and capital for Li Auto to build out a network of fancy showrooms, but I think it will pay off in the long run. After all, vehicle shoppers should be more inclined to make a purchase if they enjoy the experience.
Li Auto Stock Analysis: The Dip Is a Setup for a Rip
As my Li Auto stock analysis reveals, the drawdown was likely due to a number of factors, including some that the company couldn’t control. At the same time, Li Auto’s management is preparing for a year of robust EV sales.
Besides, Li Auto is making a smart move as the company implements the fancy-showroom concept that Nio is already using. Therefore, I encourage you to buy LI stock on the dip and prepare for a rally in the near future.
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.
