Analysts Are Optimistic We'll See A Profit From Li Auto Inc. (NASDAQ:LI)
We feel now is a pretty good time to analyse Li Auto Inc.'s (NASDAQ:LI) business as it appears the company may be on the cusp of a considerable accomplishment. Li Auto Inc., through its subsidiaries, designs, develops, manufactures, and sells new energy vehicles in the People’s Republic of China. The US$23b market-cap company announced a latest loss of CN¥2.0b on 31 December 2022 for its most recent financial year result. As path to profitability is the topic on Li Auto's investors mind, we've decided to gauge market sentiment. We've put together a brief outline of industry analyst expectations for the company, its year of breakeven and its implied growth rate.
See our latest analysis for Li Auto
Li Auto is bordering on breakeven, according to the 29 American Auto analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of CN¥1.1b in 2023. Therefore, the company is expected to breakeven roughly 12 months from now or less. We calculated the rate at which the company must grow to meet the consensus forecasts predicting breakeven within 12 months. It turns out an average annual growth rate of 49% is expected, which signals high confidence from analysts. Should the business grow at a slower rate, it will become profitable at a later date than expected.
Underlying developments driving Li Auto's growth isn’t the focus of this broad overview, though, take into account that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.
Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 21% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.
Next Steps:
There are key fundamentals of Li Auto which are not covered in this article, but we must stress again that this is merely a basic overview. For a more comprehensive look at Li Auto, take a look at Li Auto's company page on Simply Wall St. We've also compiled a list of relevant aspects you should further research:
Valuation: What is Li Auto worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Li Auto is currently mispriced by the market.
Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Li Auto’s board and the CEO’s background.
Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.
Have feedback on this article? Concerned about the content? Get in touch with us directly. Alternatively, email editorial-team (at) simplywallst.com.
This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.
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