Li Auto's Q4 earnings exceed expectations with growth in sales and operating margin, projecting significant delivery increase for the first quarter. Analysts respond positively, comparing market trends among EV peers.
Li Auto recently reported fourth-quarter earnings that surpassed expectations, signaling promising growth for the company and its electric-vehicle peers.
Li Auto delivered earnings per American depositary receipt of 60 cents from sales of $5.8 billion, outperforming Wall Street estimates of 44 cents and $5.5 billion, respectively. These results represent a significant increase from earnings of 4 cents on $2.5 billion in sales reported a year ago.
The company's fourth-quarter operating margin reached 7.3%, a notable improvement from break-even figures recorded in the previous year. This growth is attributed to Li Auto's successful performance in the competitive NEV market, driven by its three Li L series models.
CEO Xiang Li expressed confidence in Li Auto's future prospects, citing the company's expanding scale, ongoing R&D efforts, and enhanced operating efficiency. This positive trajectory positions Li Auto for continued growth and product diversification to meet evolving user needs in the upcoming year.
In an optimistic outlook, Li Auto, a leading car company, is projecting deliveries of approximately 100,000 to 103,000 vehicles for the first quarter. This marks a significant increase from the 53,000 vehicles delivered in the same period of 2023. The forecast suggests monthly deliveries of around 35,000 vehicles for both February and March, with 31,165 vehicles already delivered in January.
Citi analyst Jeff Chung expressed confidence in Li Auto's projections, noting that investors had anticipated first-quarter deliveries to range between 85,000 to 90,000. This positive sentiment led to a 12% surge in the U.S.-listed ADRs of Li Auto during premarket trading, reaching $38.99. Concurrently, S&P 500 and Nasdaq Composite futures remained steady.
While Li Auto's ADRs experienced a 16% decline over the past three months, Tesla shares decreased by 18% in the same duration. NIO and XPeng witnessed even greater drops of 27% and 53%, respectively. Concerns regarding escalating competition in the EV sector paired with decelerating demand growth have been weighing on investor sentiment. However, Li Auto's promising quarter results indicate a potential improvement in the market landscape.
China stands out as the largest market for new cars and EVs worldwide. Notably, Tesla generated approximately 22% of its 2023 sales in China, underscoring the region's significance in the global automotive industry.
Ahead of regular trading hours, NIO and XPeng shares surged by 2.4% and 3.6%, respectively. In contrast, Tesla shares observed a marginal dip of 0.2% during premarket trading.
As Li Auto continues to make strides in the competitive EV market, the industry remains dynamic and full of opportunities for growth and innovation.
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