Following the setting of an EV delivery milestone, China’s Li Auto (LI) reported strong third-quarter earnings early Thursday. Despite this, Li Auto stock experienced a decline on Wednesday.
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Deutsche Bank analyst Edison Yu highlighted growing investor concerns regarding the competitive threat from Huawei-backed Aito electric vehicles in a note to clients on Nov. 1.
Meanwhile, late Wednesday, Polestar (PSNY) warned of a decline in EV demand, missed Q3 revenue estimates, and reduced guidance, leading to a slide in Polestar stock during extended trading.
Both Li Auto and Polestar compete in the premium end of the electric car market, posing a challenge to Tesla (TSLA). Notably, Polestar is co-owned by Chinese giant Geely and Sweden’s Volvo Cars.
Li Auto Earnings
Estimates: FactSet reported analysts’ average expectation of Li Auto swinging to earnings of 37 cents per ADR share from a loss of nine cents a year ago. Revenue was anticipated to surge 242% to $4.592 billion year over year.
In Q3 2021, Li Auto exceeded $1 billion in revenue for the first time, followed by surpassing $3 billion in Q2 2023.
Results: Li Auto’s earnings per ADR share were 45 cents, with revenue surging 271% to $4.75 billion.
These results marked the fourth consecutive profitable quarter, indicating Li’s increasing profitability, as well as the fourth quarter of accelerating sales growth.
Outlook: Li Auto forecasts 125,000-128,000 deliveries in Q4, compared to the previously reported 105,108 in Q3. The company also guided for Q4 revenue of RMB 38.46 billion ($5.27 billion) and RMB 39.38 billion ($5.40 billion), representing a year-over-year gain of 118%-123%.
Li Auto Stock
Li Auto’s U.S.-listed shares rose more than 3% to 40.60 before the opening of the stock market. The stock is consolidating above the 50-day moving average with a 47.33 buy point, according to the MarketSmith chart.
Investors could consider using Tuesday’s high of 40.03 as an aggressive entry point.
In late September, Li Auto experienced a significant decline amid reports of substantial discounts due to heavy competition, including from Aito, backed by Chinese tech giant Huawei. Notably, Huawei faced U.S. sanctions due to national security concerns.
Previously, Li Auto reported 105,108 EV deliveries for the third quarter, marking a 21% increase from Q2. The company also achieved quarterly deliveries exceeding 100,000 for the first time, with October deliveries surpassing 40,000.
In addition to its established sales, Li Auto is venturing into battery electric vehicles (BEVs) and continues to outsell startup rivals XPeng (XPEV) and Nio (NIO). XPeng is set to report Q3 earnings on Nov. 15, while Nio has yet to announce a date.
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Polestar Earnings, Polestar Stock
According to FactSet, analysts’ average expectation for the EV startup was a widening of net losses per share by one cent to 15 cents, with revenue anticipated to jump 62% to $705.6 million year over year.
In its late Wednesday earnings report, Polestar posted Q3 revenue of $613 million, a 41% increase but falling short of estimates. The company also revealed a 33% higher operating loss in the quarter, primarily due to a lower gross profit and higher operating expenses.
The company updated its guidance, now expecting 60,000 EV deliveries and a 2% gross margin this year, compared to the previous expectation of 60,000-70,000 electric vehicles and a 4% gross margin in 2023. Polestar attributed this shift to weakening global consumer demand, particularly affecting the rate of EV adoption, and mentioned that Geely and Volvo will provide additional liquidity.
Polestar stock saw a 1.8% decline early Thursday, with its U.S.-listed shares falling 2.2% to 2.18 on Wednesday, nearing recent record lows. In the third quarter, the company had already reported a 50% increase in EV deliveries to 13,900.
During this quarter, the company will commence deliveries of the significant Polestar 4 in China, which it describes as “more premium, more luxurious” than Tesla’s Model Y.
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