Li Auto stock price analysis: the bullish case for this Nio rival

Li Auto (LI) stock price had a difficult year in 2024 as it crashed by over 47% from its yearly high. Its US ADRs were trading at $24.45, giving it a market cap of over $24.4 billion. So, will one of the best Chinese EV companies rebound in 2025?

Li Auto performed well in a tough year

Li Auto, one of the best Chinese EV companies, performed well in 2024, one of the toughest years for automakers. Its vehicle deliveries and revenues rose, and it became more profitable. 

This performance reinformed its state as one of the biggest and fastest-growing EV companies globally. Total revenue has jumped from just $40 million in 2019 to over $17 billion in 2023, a trend that will go on in the next few years.

Its November delivery numbers showed that it sold 48,740 vehicles during the month, a 18.8% increase from the same month last year. It has delivered over 442,000 vehicles this year, bringing its cumulative total to over 1.07 million. 

Nio has achieved these results at a difficult time in the automotive industry. Chinese brands like XPeng, BYD, and Nio have continued to boost their sales as competition rose. At the same time, the Chinese economy struggled, with retail spending falling. 

Li Auto and other Chinese EV companies are also facing hostilities abroad in key countries in Europe and the United States. The US has implemented 100% tariffs on Chinese imports, and Donald Trump has promised to do more. 

Read more: Li Auto stock: Tesla and Nio rival could enter beast mode soon

Strong financial results

The most recent financial results showed that Li Auto’s business continued doing well in the last quarter. Its revenue increased by 23.6% YoY to over $6.1 billion as the number of deliveries rose to over 152,000. It sold 131,800 in the same quarter a year earlier, a sign that its business is seeing momentum in a difficult year.

Its gross margin slipped slightly to 21% but remained higher than Nio’s 8% and XPeng’s 11%. That margin is also higher than Tesla’s 18.2%, meaning that the company’s operational metrics are better.

Li Auto had a net income of $401 million, representing a net income margin of 7%. As it scales its operations, the company will likely match Tesla’s margin in the future.

Li Auto is also trading at a discount, with a forward price-to-earnings ratio of 20 and an EV-to-EBITDA ratio of 9.7. These are good numbers for a company that is growing its market share and experiencing double-digit growth metrics.

Therefore, from a fundamental perspective, the Li Auto stock price is likely to continue rising in 2025. 

Li Auto stock price analysis

The daily chart shows that the Li Auto share price peaked at $47.20 in 2023 and then lost momentum as investors dumped EV companies. 

It has now bounced back to $24 and is hovering at the 50-day and 200-day Exponential Moving Averages (EMA).

The stock has formed a symmetrical triangle pattern and is nearing its confluence level. Therefore, the stock will likely bounce back in 2025. If this happens, the next level to watch will be at $30.97, its highest swing on October 7. A move above that level will point to more gains, possibly to the 23.6% retracement level at $40.

However, there is a risk that Li Auto stock may drop in 2025 if Donald Trump restarts his trade wars and implements hostile policies towards China. As a Chinese company, there is always a risk that it may be caught up in accounting issues similar to those of Nio and Luckin Coffee. As we wrote before, it is facing investigations of being a securities fraud.

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