Li Auto Stock Is Down After a Decline in Deliveries. Why Investors Shouldn’t Worry Yet.
Li Auto ONE
Courtesy of Li Auto
Chinese electric-vehicle maker Li Auto reported lower deliveries in May, but comments about the second quarter should be good enough to keep its stock in its recent trading range.
Li (ticker: LI) said Wednesday that it delivered 4,323 vehicles in May, down from 5,539 vehicles in April and down from a monthly peak of more than 6,000 vehicles. Shares were down slightly in premarket trading. S&P 500 and Dow Jones Industrial Average futures, for comparison, are both up about 0.1%.
Li stock closed 2.2% higher Tuesday after its peers XPeng (XPEV) and NIO (NIO) reported solid May delivery numbers that didn’t appear to be affected much by the semiconductor shortage roiling the entire automotive industry. Xpeng and NIO shares rose 7.8% and 9.8%, respectively on Tuesday.
XPeng delivered slightly more vehicles in May than in April, while NIO delivered slightly less. Maintaining their delivery levels was good enough for investors who didn’t know what to expect, as many auto makers around the globe have been forced to take unplanned downtime due to a lack of microchips.
While Li deliveries fell month to month, management talked about high order rates in the company’s news release. That’s good news Li bulls can point to.
“We are pleased to see our 2021 Li ONE, released on May 25, receive very positive feedback and strong recognition from our users demonstrated by the robust order inflow that took the total orders in May to a record high,” said Li Auto President Yanan Shen. He is optimistic that second-quarter deliveries will exceed guidance.
In May, management guided to 14,500 to 15,500 deliveries for the second quarter. Li delivered about 12,700 vehicles in the first quarter of 2021.
Coming into Wednesday, Li shares are down about 17% year to date, worse than comparable gains of the market. The chip shortage and more EV competition in China have weighed on Li stock. So have rising interest rates—which hurt shares of richly valued, high-growth companies more than others.
Declines and industry-wide headwinds haven’t dissuaded analysts though. More than 75% of analyst covering Li shares rate them Buy. The average Buy-rating ratio for stocks in the S&P is about 55%.
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