Insights

Why Li Auto Stock Jumped, Then Pulled Back Today

What happened 
Shares of Li Auto (NASDAQ: LI), a Chinese electric vehicle (EV) company, popped in early trading this morning but then lost most of their early gains by the afternoon. It appeared that investors were initially reacting to the company’s better-than-expected first-quarter results but then got cold feet about the stock — likely based on news that China’s strict “zero-COVID” policy is hurting vehicle production in the country. 
The EV stock was up by as much as 12.7% this morning but had gained only 1.8% at 12:31 p.m. ET. 
So what
From nearly every angle, Li Auto’s first-quarter results were great. The company’s sales of $1.51 billion were up 167% from the year-ago quarter and beat Wall Street’s consensus estimate of $1.44 billion. 
Image source: Getty Images.

The EV company’s non-GAAP (adjusted) earnings per American depositary shares (ADS) were $0.07, blowing past analysts’ average estimate of a loss of $0.10. 
Another highlight from the quarter that investors no doubt took notice of was that Li Auto’s vehicle deliveries reached 31,716 — up a staggering 152% from the year-ago quarter. 
But despite all that good news, some Li Auto investors may have caused the stock to pull back from its initial gains today as they processed the news that car sales in China declined 36% year over year in April. 
The Wall Street Journal reported today that strict coronavirus lockdowns in China have slowed down vehicle production in the country. 
And while sales of EVs in China grew by 78% in April, that’s the slowest growth rate since December of 2020, according to the report, and included Li Auto and its rivals seeing a slowdown in deliveries during the month. 
Now what 
With all that news, it’s no surprise that Li Auto shareholders were on a roller coaster ride today. But while investors should certainly keep an eye on vehicle production in China, they should also be pleased with Li Auto’s latest financial results. 
There’s no getting around the market’s volatility right now, and increasing concerns about U.S. inflation, the war in Ukraine, and China’s slowing economy will likely continue to cause market instability — but Li Auto shareholders should at least consider the company’s first-quarter results a win. 
Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. –

What happened 

Shares of Li Auto (NASDAQ: LI), a Chinese electric vehicle (EV) company, popped in early trading this morning but then lost most of their early gains by the afternoon. It appeared that investors were initially reacting to the company’s better-than-expected first-quarter results but then got cold feet about the stock — likely based on news that China’s strict “zero-COVID” policy is hurting vehicle production in the country. 

The EV stock was up by as much as 12.7% this morning but had gained only 1.8% at 12:31 p.m. ET. 

So what

From nearly every angle, Li Auto’s first-quarter results were great. The company’s sales of $1.51 billion were up 167% from the year-ago quarter and beat Wall Street’s consensus estimate of $1.44 billion. 

Image source: Getty Images.

The EV company’s non-GAAP (adjusted) earnings per American depositary shares (ADS) were $0.07, blowing past analysts’ average estimate of a loss of $0.10. 

Another highlight from the quarter that investors no doubt took notice of was that Li Auto’s vehicle deliveries reached 31,716 — up a staggering 152% from the year-ago quarter. 

But despite all that good news, some Li Auto investors may have caused the stock to pull back from its initial gains today as they processed the news that car sales in China declined 36% year over year in April. 

The Wall Street Journal reported today that strict coronavirus lockdowns in China have slowed down vehicle production in the country. 

And while sales of EVs in China grew by 78% in April, that’s the slowest growth rate since December of 2020, according to the report, and included Li Auto and its rivals seeing a slowdown in deliveries during the month. 

Now what 

With all that news, it’s no surprise that Li Auto shareholders were on a roller coaster ride today. But while investors should certainly keep an eye on vehicle production in China, they should also be pleased with Li Auto’s latest financial results. 

There’s no getting around the market’s volatility right now, and increasing concerns about U.S. inflation, the war in Ukraine, and China’s slowing economy will likely continue to cause market instability — but Li Auto shareholders should at least consider the company’s first-quarter results a win. 

Chris Neiger has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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