Bank of America reaffirmed its confidence in Li Auto (LI, Financials) despite a decline in the stock following the company's latest earnings report. The firm maintained a Buy rating, citing long-term strategic advantages that could support growth in the second half of the year.
Li Auto's early commitment to highway supercharging stations was noted by Bank of America analyst Ming Hsun Lee as a major component in the recent sales resurgence of its MEGA model. He also highlighted the company's dominance in China's premium electric car market, especially in the category for vehicles costing more than 300,000 renminbi ($41,700), where competition is still restricted.
Aiming to include artificial general intelligence into its cars, Li Auto is also developing its artificial intelligence strategy. With Level 4 autonomy projected to be a turning point, the business views its smart driving technology as a long-term development driver. Li Auto thinks that reaching L4 capabilities might allow a monetization model like that of chauffeur services—where customers pay for completely autonomous driving capabilities.
In the fourth quarter, the business said 158,696 car deliveries—a 20.4% rise from a year before. Reflecting a year-on-year increase of 33.1%, full-year delivery came to 500,508 automobiles. But Li Auto's first-quarter projections fell short of analysts' estimates, which helped to explain the current price drop.
Li Auto's shares dropped 4.4% on Friday and another 1.5% in premarket trade Monday after the results release.
