Li Auto Q1 24 Earnings: Deutsche Bank’s Analysis Revealed

Another day, another earnings report dissected by the financial gurus at Deutsche Bank. This time, Li Auto is under the microscope, and the verdict is a mixed bag of results.

What?

Li Auto didn’t stray far from expectations with its Q1 2024 earnings, with deliveries hitting the mark at 80,400 units and revenue clocking in at RMB 25.6 billion. The not-so-sweet surprise? Pricing pressure has taken a turn for the worse, throwing a curveball to analysts.

Deutsche Bank’s analysis reveals a 20.6% total gross margin, in line with estimates, but operational expenditures soared above projections due to amplified spending on sales, general, and administrative costs as well as research and development. Adjusted earnings per share slightly exceeded Deutsche Bank’s forecast but fell short of market consensus, influenced by net interest and other income performance.

Why does it matter?

Li Auto’s Q2 guidance calls for 105,000-110,000 deliveries, aligning closely with analyst predictions. However, a looming shadow of uncertainty hovers as revenue projections hint at a drop in average selling price due to recent price reductions and the introduction of the budget-friendly L6 model.

With full-year sales potentially lagging behind company forecasts, investors are eagerly awaiting updates on Li Auto’s roadmap to achieving a 20% gross margin. Reports of layoffs within the company suggest a strategic move to realign costs with a dwindling sales landscape, emphasizing the importance of operational efficiency in turbulent times.

How is it going to shape the future?

Li Auto’s financial performance reflects a delicate balancing act between meeting market expectations and navigating unforeseen challenges like pricing pressures. As the company charts a path forward amidst evolving market dynamics and competitive landscapes, its ability to adapt and streamline operations will be crucial in safeguarding profitability and sustaining growth in the electric vehicle sector. Investors will keep a keen eye on Li Auto’s strategic decisions and financial health as it moves through the remainder of 2024.

Source: https://cnevpost.com/2024/05/20/li-auto-q1-2024-earnings-db-1st-look/