Li Auto Inc. (NASDAQ: $LI) is a Chinese electric car maker founded by Li Xiang in 2015. The headquarters is in Beijing, and other engineering, manufacturing, and design departments are in Changzhou, Jiangsu.
On May 20, the EV maker unveiled its first quarter results for fiscal year 2024, which ended on March 31, 2024, to a negative market reception after missing revenue and EPS estimates.
Highlights of Quarter One Results of Fiscal 2024
In the first quarter, Li Autos reported an EPS of $0.17, less than the Wall Street estimate of $0.24 per share. Moreover, the company delivered 80,400 vehicles in the first quarter of 2024, with a 52.9% year-over-year growth but 39% less than the fourth quarter of 2023. Quarterly sales reached $3.55 billion, falling short of the consensus estimate of $3.7 billion. It represented a 36.4% year-over-year increase but a 38.6% decline compared to the last quarter of 2023.
The gross margin was 20.6% in Q1, a slight increase from the 20.4% in Q423 but less than the 23.5% reported in the first quarter of fiscal 2023. Li Auto reported operating expenses of $812.9 million, a 71.4% increase compared to Q123 but a 13.1% sequential decrease from Q423. The electric car maker reported a net income of $81.9 million in the quarter, a 36.7% decline year-over-year and 89.7% from the last quarter of 2023.
It ended the quarter with a negative free cash flow of 5.1 billion yuan ($700.1 million), compared to 6.7 billion yuan in the first quarter of fiscal 2023 and 14.6 billion yuan in Q423. In the first quarter, Li Auto launched three new models: the Li Mega, Li L series, and Li L6.
CEO Comments
Chairman and CEO of Li Auto, Mr. Xiang Li, said, “In the first quarter of 2024, our deliveries reached 80,400 vehicles, up 52.9% year over year, further solidifying Li Auto’s leadership position in the RMB300,000 and higher NEV market in China. In March, we launched and commenced delivery of our high-tech flagship family MPV, Li MEGA, which is also our first high-power charging BEV. Meanwhile, we accelerated our efforts to deploy super charging stations nationwide, adding charging resources for Li Auto users to expedite the 0-to-1 development phase of our high-power charging BEVs.”
He added, “As our company continues to grow amidst an ever-changing market landscape, we will embrace the twists and turns that the journey presents and consistently focus on enhancing operating efficiency while persistently creating incremental user value.”
Li Auto Q224 Guidance
During the earnings call, Li Auto revealed that it will not deliver any all-electric SUVs in 2024. These vehicles will be released in the first half of 2025. Moreover, Li Auto anticipates Q2 deliveries of 105,000-110,000 vehicles, representing a 21%-27% increase compared to last year but falling short of analyst expectations. Having already delivered 25,787 vehicles in April, the Q2 guidance implies deliveries of 79,213-84,213 vehicles for May and June.
In the last few weeks, the company has cut the prices on all cars. However, the L6 SUV was not included in the price cuts as it is the smallest and most affordable car they offer. They also announced they would lay off their workforce by more than 18%.
Li Auto (LI) Stock Performance
Following the dismal earnings results. Li Auto stock declined by 14.5% in the early trading hours on Monday as of 10:45 AM EDT. The stock closed at $21.71, a 12.78% decline from its previous closing price of $24.89. The market cap is $21.554 billion, with an average volume of 9,044,608. The 52-week high of $LI is $47.33, and the low is $20.78.
Should You Add LI To Your Portfolio?
Li Auto lost money in the first quarter and burned through $700 million in cash. However, the stock price is nearly half what it was three months ago. Consequently, its trailing P/E has also fallen to around 14.33. On the bright side, vehicle deliveries are expected to rise over 20% in Q2. The current downturn in the stock is temporary for what is clearly a growth EV stock. The current price could potentially be a great entry point for growth investors.
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