Li Auto (NasdaqGS:LI): Valuation Check After HSBC Downgrade and Mounting Operational Setbacks

Li Auto (LI) is back in focus after HSBC cut the stock to Hold and slashed earnings forecasts, citing a major recall, delivery bottlenecks, and weaker sales as mounting operational headaches.

See our latest analysis for Li Auto.

Those concerns have already been reflected in the tape, with Li Auto’s share price sliding to around $17.0 and posting a steep 90 day share price return of roughly negative 34 percent. The 1 year total shareholder return of about negative 28 percent suggests sentiment has been deteriorating rather than stabilising.

If Li Auto’s volatility has you rethinking your exposure to car makers, this could be a good moment to explore other auto manufacturers that may offer a different balance of growth and risk.

With Li Auto trading at a steep discount to analyst targets despite double digit revenue and profit growth, the key question now is whether investors are being overly pessimistic or simply realistic about the company’s future. Is this a buying opportunity, or is the market already pricing in all the growth ahead?

Most Popular Narrative Narrative: 30.4% Undervalued

Compared with Li Auto’s last close at $17.00, the most popular narrative sees fair value materially higher, implying the market is heavily discounting its long term potential.

The rapid buildout of Li Auto's ultra fast charging network (now the largest among Chinese automakers, with plans to reach 4,000 stations by year end) and development of charging technology (e.g., 5C batteries and autonomous charging robots) enhances user experience and alleviates range anxiety, thus accelerating BEV adoption and boosting sales volumes.

Read the complete narrative.

Curious how this charging moat, ambitious revenue ramp, rising margins, and a punchy future earnings multiple all combine into that fair value gap? The full narrative connects the dots.

Result: Fair Value of $24.43 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

However, elevated R&D spending and fierce domestic EV competition could erode margins and stall Li Auto’s path to the premium, high growth positioning that bulls expect.

Find out about the key risks to this Li Auto narrative.

Build Your Own Li Auto Narrative

If you see the story differently or want to dig into the numbers yourself, you can build a personalised view in just a few minutes: Do it your way.

A great starting point for your Li Auto research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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