LI

Why Li Auto Stock Keeps Going Down

Investors in Chinese automaker Li Auto (NASDAQ: LI) are having a rough month of May. After reporting a decline in sales Monday, which sent its shares tumbling double digits, the company announced Tuesday that it will delay releasing new all-electric SUV models until 2025. Shares of Li Auto stock reacted poorly to the news, falling 3.6% through 10 a.m. ET.

That makes six straight days of declines for Li stock.

Li's latest bad news

A lack of electric chargers appears to be (at least) one culprit for Li's latest bad news. As Reuters reports, Li planned to unveil three new all-electric SUV models this year. (To date, Li has been primarily a hybrid electric carmaker.) But Li says it lacks "enough charging stations and enough incremental display spots (in our retail shops)" to support demand for the new models and will delay production until they're built.

But here's the thing: If we read between the lines, Li seemed to offer this explanation for postponing the new models as also explaining poor sales of its Mega electric minivan. Introduced in March, Li had hoped to sell 8,000 units of Mega per month -- but it's so far selling closer to 3,000.

Is Li Auto stock a sell?

Now, this argument isn't wholly without merit. As Reuters observes, Li's only built about 400 charging stations in China so far versus Tesla's (NASDAQ: TSLA) 2,000 and Nio's (NYSE: NIO) 2,200. But consider this:

In theory, all electric cars in China are supposed to be able to use GBT chargers interchangeably. In other words, they're not supposed to have to worry about the NACS/CCS issue that (still) bifurcates the charging system in the U.S. In this case, Li's 400 chargers shouldn't be an issue if Li buyers can just charge at one of Tesla's or Nio's. But that doesn't seem to be helping Li or preventing its sales from falling 39% sequentially last quarter -- not a great look for a growth stock.

Conclusion: Li's problems may be bigger than just not having enough chargers.

Should you invest $1,000 in Li Auto right now?

Before you buy stock in Li Auto, consider this:

The Motley Fool Stock Advisor analyst team just identified what they believe are the 10 best stocks for investors to buy now… and Li Auto wasn’t one of them. The 10 stocks that made the cut could produce monster returns in the coming years.

Consider when Nvidia made this list on April 15, 2005... if you invested $1,000 at the time of our recommendation, you’d have $580,722!*

Stock Advisor provides investors with an easy-to-follow blueprint for success, including guidance on building a portfolio, regular updates from analysts, and two new stock picks each month. The Stock Advisor service has more than quadrupled the return of S&P 500 since 2002*.

See the 10 stocks »

*Stock Advisor returns as of May 13, 2024

Rich Smith has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Nio and Tesla. The Motley Fool has a disclosure policy.

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

Tags

More Related Articles

Info icon

This data feed is not available at this time.

Sign up for the TradeTalks newsletter to receive your weekly dose of trading news, trends and education. Delivered Wednesdays.