Shares of Chinese EV company Li Auto (LI) are down in today’s trading as investors await its Q3 earnings results on October 31 before the market opens. Analysts are expecting earnings per share to come in at $0.38 on revenue of $5.86 billion. This equates to a 17.4% decrease for the former and a 22.3% increase for the latter on a year-over-year basis, according to TipRanks’ data.
Although earnings per share fell, the strong revenue growth suggests that Li Auto is gaining market share. In fact, Elon Musk has himself warned about the growing competitiveness of Chinese EV companies. More specifically, he believes that they would “pretty much demolish most other companies in the world” if no trade barriers are put in place.
This level of compeition has helped Li Auto to beat earnings estimates in seven of the previous eight quarters.
Li Auto Is Not Without Problems
As positive as Elon Musk’s comments are, Li Auto’s stock has been struggling, as it is down 24% on a year-to-date basis. In fact, analyst and investor sentiment appears to be souring. According to TipRanks’ Bulls Say, Bears Say tool, bearish analysts are expecting sales guidance to be reduced from 560-640k to 480-500k units.
In addition, sentiment among the investors tracked by TipRanks is very negative. Although only 1% of portfolios own the stock, those who do own the stock have been selling, as 4.1% have decreased their holdings in the past 30 days.
Is LI a Good Stock to Buy?
Turning to Wall Street, analysts have a Moderate Buy consensus rating on LI stock based on five Buys, four Holds, and zero Sells assigned in the past three months, as indicated by the graphic below. Furthermore, the average LI stock price target of $28.53 per share implies that shares are fairly valued at the moment.
