By Jiahui Huang
Li Auto's shares fell after it eked out a profit in the fourth quarter, barely recovering from the previous quarter's loss, as investors weighed the challenges facing the company amid slowing demand and intense competition in China's electric-vehicle market.
Shares in the Chinese plug-in hybrid specialist dropped nearly 4% early Friday in Hong Kong before recouping some losses. The stock was recently 3.0% lower, underperforming the benchmark Hang Seng Index's 0.5% fall.
The decline came after Li Auto reported a more than 99% plunge in net profit to 6.5 million yuan, equivalent to about $950,000, and gave a weak first-quarter guidance.
The automaker on Thursday said it expects to deliver 85,000 to 90,000 units this quarter, fewer than the 92,864 units it sold in the year-ago period, and forecast revenue of 20.4 billion yuan to 21.6 billion yuan, down 19% at the midpoint of the range.
"The first quarter looks brutal, with vehicle gross margin guided to 5% only," Bernstein analysts said. The company is facing rising material costs, primarily from lithium batteries, as well as pressures from the L-series vehicle destocking and its own purchase-tax subsidies and additional discounts, they wrote in a note.
Citi flagged downside risks from an aging L-series model lineup, margin dilution from pivoting to full-electric models, and rising industry competition.
The consumption downtrading trend in China as the economy slows poses another headwind for Li Auto, a high-end brand, Citi said.
Whether Li Auto can turn around the business this year will hinge on a successful L-series facelift, starting with the L9 in the second quarter, Bernstein analysts said.
Bernstein also said that management's guidance of 20% sales volume growth this year is on the bullish side, given slower EV market expansion and rising competition from new premium-model launches.
Write to Jiahui Huang at jiahui.huang@wsj.com
(END) Dow Jones Newswires
03-13-26 0011ET
