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Li Auto’s stock hits a speedbump on Q1 results

Tuesday, May 21, 2024

Today’s headlines

What’s happening: Shares of Li Auto dipped on Monday, after the company released results for its first quarter.

What happened: The electric vehicle maker reported a surge in vehicle sales in the quarter.

However, the stock came under pressure due to weaker-than-expected earnings.

How were the results: The Chinese EV company reported a double-digit surge in revenues for the latest quarter.

  • Revenues grew by 36.4% year-over-year to $3.55 billion, but missed consensus estimates of $3.84 billion.
  • Adjusted net earnings contracted by 10.5% to 17 cents per share, coming in short of Wall Street expectations of 35 cents per share.

Why it matters: Li Auto is facing stiffening competition from its rivals, including Tesla, which weighed on its earnings in the quarter.

Li Auto announced a steep reduction in prices on most of its vehicles, except its most-affordable vehicle, the L6 SUV. Earlier this month, the company also announced plans to lay off more than 18% of its workforce in a bid to contain costs.

Li Auto’s vehicle sales climbed 32.3% to $3.4 billion due to a surge in vehicle deliveries. Total vehicle deliveries jumped 52.9% year-over-year to 80,400 units during the latest quarter.

However, Li Auto’s vehicle margins shrank by 50 bps year-over-year to 19.3%.

“In March, we launched and commenced delivery of our high-tech flagship family MPV, Li MEGA, which is also our first high-power charging BEV. Meanwhile, we accelerated our efforts to deploy super charging stations nationwide, adding charging resources for Li Auto users to expedite the 0-to-1 development phase of our high-power charging BEVs,” CEO Mr. Xiang Li said.

Management guided to revenues between $4.1 billion and $4.3 billion for the second quarter, representing 4.2% to 9.4% year-over-year growth. They also projected vehicle deliveries of 105,000 to 110,000, representing a year-over-year surge of 21.3% to 27.1%.

How shares responded: Li Auto’s shares fell 12.8% to settle at $21.71 on Monday, following the release of quarterly results. The stock has lost around 37% year-to-date.

What to watch: Investors will continue monitoring rising competition, which could impact the company’s overall results ahead. XPeng, one of its major peer, is set to release earnings for the first quarter on Tuesday.

The markets today

The Canadian dollar will be in focus today ahead of inflation data

Context: The CAD/USD forex pair edged lower on Monday amid a decline in crude oil prices.

Details: Investors continued monitoring the Bank of Canada’s monetary policy outlook, with growing speculations of the central bank beginning to cut interest rates in June or July.

Meanwhile, the US Federal Reserve is expected to hold interest rates unchanged until September, especially given the lower-than-expected reading on inflation released last week.

The OECD said it sees Canada’s economy expanding by 1% this year, compared to the 2.6% growth rate it expects for the US.

Strength in the greenback weighed on the CAD/USD forex pair on Monday. The US dollar index, which measures the greenback’s performance versus a basket of major peers, gained more than 0.1% to 104.57. Last week, the dollar index has shed around 1% with speculations of interest rate cuts by the Federal Reserve this year.

Weakness in price of crude oil, one of Canada’s major exports, also exerted pressure on the loonie. WTI crude oil for June delivery lost 26 cents to settle at $79.80 per barrel on Monday.

The CAD/USD forex pair fell around 0.1% to 1.3625 on Monday. The loonie has lost around 3% against the US dollar year-to-date.

The overall momentum remained limited on Monday, as markets in Canada were closed for the Victoria Day holiday.

What to watch: Investors await the release of inflation data from Canada today. The annual inflation rate in Canada, which increased to 2.9% in March, is expected to ease to 2.7% in April. Analysts expect consumer prices to increase by 0.5% in April, compared to a 0.6% rise in March.

Other Markets: European indices closed higher on Monday, with the FTSE 100, DAX 40, CAC 40 and STOXX Europe 600 Index up by 0.05%, 0.35%, 0.35% and 0.18%, respectively.

The news shaping the markets

Russia’s Slavyansk oil refinery was reportedly damaged by Ukraine in a drone attack. The news sent the safe-haven US dollar index higher in forex trading this morning.


Australia’s Westpac-Melbourne Institute Consumer Sentiment index declined 0.3% to 82.4 in May. The country’s consumer mood declining for the third straight month exerted pressure on the AUD/USD forex pair.


South Korea’s Composite Consumer Sentiment Index declined to a reading of 98.4 points in May, which sent the KRW/USD pair lower in forex trading this morning.


Chile posted a current account deficit of $104 million for the first quarter versus a year-ago surplus of $513 million, which exerted pressure on the CLP/USD forex pair.


Mexico’s retail sales fell 1.7% year-over-year in March, compared to 3% growth in the prior month. The latest figure also came in weaker than market expectations of a flat reading and sent the MXN/USD pair lower in forex trading this morning.

What else to watch today

Germany’s producer prices, South Africa’s leading business cycle indicator, Eurozone’s current account, balance of trade, construction output and hourly labour costs, Italy’s current account, US Redbook index and API crude oil stocks change, China’s foreign direct investment, Brazil’s federal tax revenue, as well as Argentina’s balance of trade.


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