Why Li Auto Stock Surged Today

Core Insights - Li Auto's stock experienced a significant gain of 6.7% in a recent trading session, despite being down approximately 49% year to date [1][3] - The company reported delivering 47,774 vehicles in June, marking a nearly 47% year-over-year increase, and a total of 108,581 vehicles delivered in Q2, up 25.5% annually [2] - Li Auto's current valuation aligns with expected sales for the year, trading at about 17 times the anticipated adjusted earnings, suggesting potential undervaluation given recent delivery trends [3] Delivery Performance - In June, Li Auto delivered 47,774 vehicles, reflecting a nearly 47% increase compared to June 2023 [2] - For the second quarter of this year, the total vehicle deliveries reached 108,581, which is a 25.5% increase year-over-year [2] Valuation and Market Conditions - Despite recent gains, Li Auto's stock remains down roughly 49% for the year, indicating a challenging market environment [3] - The stock is currently valued in line with this year's expected sales and trades at approximately 17 times the expected adjusted earnings, suggesting it may be undervalued [3] - The Chinese EV industry has benefited from ongoing stimulus, but the overall economic conditions in China appear uncertain [3][4] Geopolitical Considerations - There is a potential for deteriorating political relations between China and the U.S., which could negatively impact Chinese stocks listed on U.S. exchanges [4] - While Li Auto may seem attractively valued based on recent business momentum, the stock carries risks that may not be fully reflected in its price-to-earnings and price-to-sales ratios [4]