One-glance verdict
Undervalued
$65.21 our estimate vs market $12.37
Wall Street consensus: $16.41 (-74.8% lower than our fair-value estimate)
81% below our estimate, below the bear case
Fundamentals snapshot
Li Auto Inc.
LI · NMS · Consumer Cyclical · Auto Manufacturers
Current price
$12.37
52-week range
$11.65 - $27.10
Market cap
$12.09B
Balance sheet
Healthy
-3.10x Concerning
Net cash $10.57B. Interest coverage shows how many times profit covers the interest bill.
What stands out
1 Reward
3 Risks
1 rewards · 3 risks
- Reward Free cash flow was positive in 5/10 years.
- Risk Insider ownership is only 0.0% (peer median: 15.3%).
- Risk Return on equity was -6.6% last year — the company lost money on shareholders' equity.
- Risk Operating margin compressed from -8.1% to -9.0% over 3 years.
What this company does
Li Auto Inc.
Li Auto is a Chinese car company that designs and sells premium electric vehicles, mainly large SUVs for families. The company's revenue (the total money it makes from sales) comes almost entirely from selling these cars, which stand out in China's crowded market. This is because they feature "extended-range" technology, where a small gas generator recharges the battery on the go, helping drivers avoid the fear of running out of power.
How the company got here
Founded in 2015 by entrepreneur Li Xiang, the company initially focused on a unique approach to electric vehicles to solve 'range anxiety' (the fear of a battery running out of power). Instead of pure electric cars, their first hit product, the Li ONE, was an extended-range electric vehicle (EREV), which includes a small gasoline engine to charge the battery, giving drivers more confidence on long trips. This strategy was successful in China, and the company grew quickly, eventually listing on the Nasdaq stock exchange in the U.S. in 2020. Now, Li Auto has become a profitable and significant player in China's competitive electric vehicle market, expanding from a single model to a lineup of family-focused vehicles.
What it actually does
Li Auto designs, builds, and sells high-end smart electric cars in China, focusing on larger vehicles for families like SUVs and multi-purpose vehicles (MPVs). Think of them as 'mobile homes' that are spacious, comfortable, and packed with technology. They sell their cars directly to customers through their own stores and online channels, rather than using traditional dealerships. Besides selling cars, the company also provides related services like installing home charging stations, vehicle maintenance, and after-sales support.
Vehicle Sales
The vast majority of Li Auto's money comes from selling its cars. This includes their popular L-series, which are premium family SUVs that use the company's signature extended-range technology. More recently, they have also started selling all-electric vehicles, like the Li MEGA, which runs only on a battery. Customers in China who are looking for a premium, family-friendly electric vehicle with advanced technology are the ones who buy these cars.
Other Sales and Services
A much smaller, but still important, part of the business comes from a variety of other offerings. This includes the sale of charging stations for home installation, which provides customers with a convenient way to charge their vehicles. The company also earns revenue from routine vehicle servicing, maintenance, and other after-sales support provided at their service centers. This segment is a small slice of the company's total revenue (the total money a company brings in from sales) but helps to support the ownership experience for their customers.
What management is betting on now
Management is making a big push into fully-electric vehicles to compete with other major electric car makers. A key part of this strategy is building out their own network of '5C' supercharging stations across China, which can add a lot of range to a car's battery in a very short time. They are also investing heavily in self-driving technology, with the goal of offering advanced autonomous driving features in more cities. Finally, the company is beginning to expand its sales outside of China, starting with markets in the Middle East and Central Asia.
Price history
How the share price has moved
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Loading price history…
Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q4
$1.12B
FY2025 Q4
$-1.83B
Revenue
$16.06B
Net income
—
Diluted EPS
0.08
Operating cash flow
$-1.23B
Free cash flow
$-1.83B
Fetching…
Sources
Revenue
$19.79B
Net income
—
Diluted EPS
0.52
Operating cash flow
$2.18B
Free cash flow
$1.12B
Fetching…
Sources
Is it cheap or expensive?
Fair value $65.21 vs current price $12.37
Wall Street consensus is the average analyst price target: $16.41 (-74.8% lower than our fair-value estimate).
Our most-likely fair value is $65.21 a share — about 427.2% above today's price of $12.37, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Healthy
Net cash $10.6B - more cash than debt. Interest coverage -3.1x.
Net debt
$-10.57B
Interest coverage
-3.10x
Li Auto Inc.'s profit covers its interest bill about 0.0 times over. which is weaker than most peers shown here and 5 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Healthy
Worse cushion
Baseline
Better cushion
LI
BASELINE
Li Auto Inc.
Total debt $2.19B Interest coverage -3.10x This is the baseline the peer rows are being compared against.
Total debt $4.32B Interest coverage -15.86x Neither company has much profit cushion over interest right now.
Total debt $4.00B Interest coverage -6.99x Neither company has much profit cushion over interest right now.
Total debt $5.35B Interest coverage -13.08x Neither company has much profit cushion over interest right now.
Total debt $3.66B Interest coverage -36.82x Neither company has much profit cushion over interest right now.
Total debt $6.02B Interest coverage -5.29x Neither company has much profit cushion over interest right now.
What you should know
The case for and against LI
1 Reward
3 Risks
Rewards
-
Free cash flow was positive in 5/10 years.
Risks
-
Insider ownership is only 0.0% (peer median: 15.3%).
-
Return on equity was -6.6% last year — the company lost money on shareholders' equity.
-
Operating margin compressed from -8.1% to -9.0% over 3 years.
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
—
Forward P/E
15.22x
P/B
1.28x
P/S
0.12x
EV/EBITDA
36.20x
PEG ratio
4.41x
Profitability
How much profit each dollar creates
Gross margin
13.6%
Operating margin
-9.0%
Net margin
-4.4%
ROE
-6.6%
ROA
-2.8%
Health
Liquidity and balance-sheet strength
Debt / equity
0.22x
Current ratio
1.81x
Quick ratio
1.57x
Total debt
$2.19B
Total cash
$12.75B
Growth
How the business has been compounding
Revenue TTM
$59.86B
Revenue 5Y CAGR
39.5%
EPS TTM
-0.27
EPS 5Y CAGR
—
Cash flow
How much cash the business throws off
Operating CF TTM
$9.16B
Free CF TTM
$-1.83B
FCF margin
-3.1%
Dividend
Shareholder payout
Yield
—
Payout ratio
0.0%
Last ex-div date
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