Is Li Auto (LI) Undervalued As Its Chip Unit Secures RMB1.625b In New Funding?
Li Auto (NasdaqGS:LI) drew fresh attention after its chip subsidiary, Shanghai Mahe Xin Technology, secured RMB1.625b in new equity financing, supporting its in-house domain controller initiative and linking employee incentives to that growth.
For context, Li Auto’s share price has softened over the past year, with the 1-year total shareholder return declining 49.62% and the year to date share price return down 34.26%. This points to fading momentum even as the chip unit secures fresh capital and attention.
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Li Auto now trades at a hefty discount to both analyst targets and one intrinsic estimate, even as losses and chip spending keep investors wary. Is this caution mispriced, or exactly what the current fundamentals deserve?
Most Popular Narrative: 25% Undervalued
On the most followed view, Li Auto’s fair value sits around $15.16 compared with the last close at $11.34. This places significant emphasis on its ability to turn heavy AI and battery spending into something more scalable.
The main thing that has to go right is that heavy AI and battery R&D spending, along with the store partner model and overseas rollout, turns current revenue volatility and lower vehicle margins into a more efficient and scalable business.
See why 79 investors see Li Auto as 25% undervalued.
Result: Fair Value of $15.16 (UNDERVALUED)
Still, the Li Auto story can unravel if heavy AI and battery spending fails to lift margins, or if intense NEV competition keeps vehicle profitability under pressure.
Find out about the key risks to this Li Auto narrative.
Another Way To Look At Li Auto’s Value
The SWS DCF model points to a fair value of $14.63 for Li Auto compared with the recent $11.34 price, which also suggests the stock trades at a discount. When both a DCF view and the narrative fair value lean the same way, the real question becomes which assumptions you trust more.
Look into how the SWS DCF model arrives at its fair value.
Next Steps
Curious whether the current mood around Li Auto matches your own read of the facts, especially with optimism around at least one potential reward? Act quickly, stress test the upside and downside, and ground your stance by reviewing the 2 key rewards.
Looking for more investment ideas beyond Li Auto?
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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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