Li Stock shows strong technical action as Li Auto digests gains after hitting highs

Li-Auto

Li-Auto

LI


$1.08

2.92%




17%

Analysis of MICI stocks

  • Big bounce off the 21 day line, but in light volume. Could form a base.

composite score

Industry group ranking

Emerging model

Consolidation

* No real-time data. All data displayed was captured as of 2:30 p.m. EDT on 07/13/2022.

LI stock is the IBD stock of the day as the Chinese electric vehicle startup pauses near highs after a huge rally fueled by strong earnings and booming electric vehicle sales.

Based in China Li-Auto (LI) manufactures the Li One and L9, high-end electric SUVs. Both models use “range extenders”, gasoline engines used to recharge electric vehicle batteries while driving. Its second-quarter electric vehicle sales rose 63% year-over-year, continuing a strong streak of growth, but fell quarter-on-quarter due to chip shortages and disruptions of supply.

Chinese startups Li Auto, Nio (NIO) and Xpeng (XPEV) are difficult You’re here (TSLA) and BYD (BYDDF) in the world’s largest automotive market.


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LI stock digestion gains near highs

IBD 50 stock rose 2.9% to top 38 on the stock exchange today.

Li Auto stock is consolidating near highs after a seven-week peak from early May to late June, which saw the stock more than double in value. EV stock is trading fairly tight on MarketSmith’s weekly chart, a positive sign. Moreover, its relative strength line remains close to the highs. A rising RS line is a sign of outperformance against the declining S&P 500.

Li is consolidating above, and having just broken through, its highs of last December and July. It is possible that consolidation forms a new base.

On Wednesday, IBD added LI shares to SwingTrader after finding support near its 21-day line.

A relative strength rating of 98 means Li Auto has outperformed 98% of all stocks in IBD’s database over the past year. Chinese electric vehicle giant BYD boasts an RS rating of 96. But both Nio and Tesla have poor RS ratings amid various challenges over the past year.

Li Auto Profits: First Full Year of Profits

LI achieves a superior IBD composite score of 94 out of 99. The Comp score combines key fundamental and technical measurements into one easy-to-use score.

Li’s average EPS rating of 76 reflects a shaky quarterly earnings record. But it looks solid compared to many EV startups that fail to deliver their first car and live up to the hype, let alone generate revenue and profit.

On a per-share basis, Li Auto’s profit was seven cents in the last quarter, defying views of a seven-cent loss. Revenue jumped 161% year over year.

It comes after Li Auto nearly tripled its sales in 2021.

Amid supply headwinds and tough competition, Wall Street expects Li’s sales growth to slow in 2022 and 2023 to a still-robust 84%.

While Li Auto already has a few profitable quarters, analysts expect Li to become profitable on an annual basis for the first time in 2023. It is expected to earn 28 cents per ADR compared to a loss of 28 cents in 2020, according to FactSet. .

Li Auto Stock powered by L9 SUV orders

IBD 50 stock shows seven quarters of increases in fund ownership, according to the IBD Stock Checkup tool. In June, 636 funds held LI shares, up 2% from March.

On the product line front, Li Auto recently unveiled the L9 SUV and expects to begin deliveries in August. LI stock peaked on June 24, as the company announced huge orders for the L9, its second “extended-range” electric vehicle. The range extender system aims to alleviate “range anxiety” among electric vehicle buyers in parts of China where charging stations are scarce.


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Among its advanced features, the L9 claims to have the first self-driving system developed by the company. It racked up 30,000 orders within three days of opening reservations.

Electric vehicle sales in China more than doubled in 2021 but have come under some pressure this year, amid Covid and supply disruptions.

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