Li Auto stock flies after revenue quadruples to beat forecasts

Li Auto stock flies after revenue quadruples to beat forecasts

China-based EV maker’s loss was wider than expected, but gross margin more than doubled and cash flow turned positive

Shares of Li Auto Inc. took flight Wednesday, after the China-based electric vehicle maker reported a fivefold increase in first-quarter revenue that beat expectations and a swing to positive free cash flow.

The stock LI, +14.16% soared 15.5% in afternoon trading Wednesday, putting it on track for the biggest gain this year, the third-biggest gain since it went public on July 30, 2020 and highest close in seven weeks.

The company reported early Wednesday a net loss for the quarter to March 31 that widened to RMB360.0 million ($54.9 million), or RMB0.40 a share, from RMB77.1 million, or RMB1.83 a share, in the same period a year ago. The per-share loss narrowed as the weighted average number of shares increased a little more than sevenfold to 904.7 million shares.

Excluding nonrecurring items, the adjusted per-share loss came to RMB0.20, missing the FactSet consensus for a loss of RMB0.10.

Total revenue increased 319.8% to RMB3.58 billion ($545.7 million), beating the FactSet consensus of RMB3.54 billion, as vehicle sales grew 311.8% to RMB3.46 billion.

Meanwhile, total cost of sales increased 277.7% to RMB2.96 billion, which boosted gross margin to 17.3% from 8.0%.

Free cash flow swung to a positive RMB570.2 million ($87.0 million) from cash burn of RMB185.2 million a year ago.

The company delivered 12,579 vehicles during the quarter, which was down from 14,464 vehicles delivered in the sequential fourth quarter, but was more than four times the 2,896 vehicles delivered in the first quarter of 2020.

Separately, the company said it officially released on March 25 the 2021 Li ONE vehicle, the first with navigation on advanced driver-assistance systems (ADAS) as a standard feature. It has a New European Driving Cycle (NEDC) range of 1,080 kilometers, or about 671 miles, and has a flat retail price of RMB338,000 (about $51,600).

Looking ahead, the company expects second-quarter total revenue of between RMB3.99 billion ($609.0 million) and RMB4.27 billion ($651.7 million, representing growth of 104.6% to 119.0% from the year-ago period, while the current FactSet consensus is for revenue of RMB4.52 billion.

Li expects second-quarter deliveries to rise 119.6% to 134.7% from a year ago, to between 14,500 and 15,500 vehicles.

Li Auto’s stock has slumped 20.0% year to date, but has outperformed shares of fellow China-based EV makers Nio Inc. NIO, +4.69%, which have shed 22.1%, and XPeng Inc. XPEV, +7.45%, which have dropped 25.4%.

In comparison, EV market leader Tesla Inc.’s stock TSLA, +2.39% has lost 11.5% this year, while the iShares MSCI China exchange-traded fund MCHI, +0.65% has edged up 1.1% and the S&P 500 index SPX, +0.19% has gained 11.7%.

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