Li Auto stock slides on Q1 earnings, net profit decline

Shares of Li Auto (LI) are falling in Monday's pre-market session after the Chinese car company reported net profit declines and missed quarter-over-quarter EV delivery estimates. Morning Brief Hosts Seana Smith and Brad Smith check out the electric vehicle maker's latest earnings print.

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This post was written by Luke Carberry Mogan.

Video transcript

Lee auto shares are under pressure.

After reporting that first quarter, net profit fell 36% from a year ago, steep rise in research, hiring new staff and other operating expenses, offsetting some of the higher sales that the company did see.

It also cut the prices though across the board of its vehicles last month as it continues to face intense pricing competition.

Remember the likes of Tesla BRD Xon obviously up putting some pressure on this day.

But when it comes to what we just heard, we also want to call out the delivery numbers because I think that's critical to talk about here when it talks about Leo delivering 80,400 vehicles in Q one.

Yes, it was up just over 50% from levels a year ago, but it was down nearly 40% versus the levels that we saw in Q four.

So I think that highlights some of the softening that we're seeing within China's market.

And then also just in terms of questions about what the current demand looks like when it comes to the current quarter and the rest of the year, maybe the pressure that we could see beyond Lee Auto when we're talking about some of those competitors.

Yeah, and that's especially where it kind of brings into mind some of the year over year comps and how they might not actually be as much of a pulse on the state of the EV market right now as much as the kind of quarter over quarter, which you saw a decrease in vehicle sales quarter, over quarter of about 40 percent here versus the fourth quarter of 2023.

And then additionally, you look at the vehicle margins that came in at 19.3% in the first quarter of 2024.

You compare that with a 19.8% margin so larger than this most recent quarter in the first quarter of 2023.

And then, yeah, look back to the fourth quarter of 2023 as well.

That was 23 ish percent there.

So declines in margin declines in vehicle sales right now.

And I think just coming back to your point of exactly how this business is going to be able to continue to operate right now and, and make sure that they can ensure investors that they are going to maintain this profit margin as well.

With this kind of waning demand that we're seeing right now.

It's really gonna come back to the incentives that they're offering as well in the competitive landscape because that's what we're seeing too now from some of the auto manufacturers.