Li Auto's Shares Slide as Sales Slow, Raising Concerns about Earnings
Li Auto, a Chinese automaker, saw its Hong Kong-listed shares decline on Wednesday amidst signs of slowing sales. This has raised concerns among investors that the company's earnings may have reached their peak, despite strong second-quarter results.
The company's shares were down 6.6% at 165.80 Hong Kong dollars (US$21.22), with a low of HK$162.00 earlier in the day. This marks the largest one-day percentage loss since January 2022. Despite the recent decline, Li Auto's shares have risen 116% year-to-date.
Li Auto reported a net profit of 2.29 billion yuan ($318.3 million) for the April-June period, a significant turnaround from a loss of CNY618.0 million in the same period last year. Revenue also surged to CNY28.65 billion from CNY8.73 billion, driven by a threefold increase in vehicle sales.
However, investors remain concerned about Li Auto's earnings trajectory. Analysts at Citi noted that the company's retail sales slowed in the first week of August. The analysts also expressed disappointment with Li Auto's relatively conservative third-quarter guidance. The company expects car deliveries between 100,000 and 103,000 units, limited by production capacity. Production bottlenecks at one of its factories, caused by supply-chain issues, continue to pose challenges for Li Auto.
Furthermore, Li Auto faces intensifying competition and pricing battles within China's battery-powered electric vehicle market. Analysts predict that these headwinds will impact the company in 2024 when it launches its own battery-powered EVs.
Li Auto's future performance will be closely monitored by investors given these concerns.
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