Recommendation: Buy
| Entry Date | Symbol | Recommendation | Entry Price (USD) | Target 1 (USD) | Target 2 (USD) | Holding Duration | Position Status | Return(%)* |
|---|---|---|---|---|---|---|---|---|
| 24 Feb, 26 | LI | Buy | USD 18.47 | USD 19.5 | USD 20.5 | 6 days | Closed |
7.96%
|
*Return(%) represent the percentage change between the entry price and exit price of the recommendation.
Data Powered by EOD Historical Data (“EODHD”).
Li Auto Inc. operates in the energy vehicle market in the People's Republic of China. It designs, develops, manufactures, and sells premium smart electric vehicles. The company's product line comprises MPVs and sport utility vehicles. It offers sales and after sales management, and technology development and corporate management services, as well as purchases manufacturing equipment. The company offers its products through online and offline channels. The company was formerly known as Leading Ideal Inc. and changed its name to Li Auto Inc. in July 2020. Li Auto Inc. was founded in 2015 and is headquartered in Beijing, the People's Republic of China.
Controlled Overall Operating Expenses: Operating expenses declined modestly to RMB5.6 billion in Q3 FY25 from RMB5.8 billion in Q3 FY24, representing a 2.5% reduction despite increased R&D investments
SG&A Expense Optimization: Selling, general and administrative (SG&A) expenses declined materially to RMB2.8 billion in Q3 FY25 compared with RMB3.4 billion in Q3 FY24, marking a 17.6% decrease
Substantial Revenue Contraction: Total revenues decreased to RMB27.4 billion in Q3 FY25 from RMB42.9 billion in Q3 FY24, marking a 36.2% decline
Significant Decline in Vehicle Deliveries: Vehicle deliveries fell sharply to 93,211 units in Q3 FY25 from 152,831 units in Q3 FY24, representing a 39.0% year-over-year decrease
Li Auto’s investment risk profile is primarily driven by delivery volatility, margin sensitivity to product mix and recall-related costs, sustained negative free cash flow, intensifying competition in China’s EV market, and execution risks associated with new model rollouts and global expansion
| Entry Price | Support* | Target 1** | Target 2** |
|---|---|---|---|
| 18.47 | 17.0 | 19.5 | 20.5 |
Data Source: REFINITIV, Analysis: StockNextt
*Support can be considered as an indicative stop-loss, and if prices move below that level on closing basis individuals may evaluate exiting the position depending on their risk appetite, previous holdings, and other factors considered. The support and resistance levels may need to be re-evaluated within 4-6 weeks’ time frame depending on the stock price movements from the date of recommendation on the stock.
**Target prices may vary by ±0.5% depending on market volatility.
Revenue Performance and Delivery Trends: Li Auto reported total revenues of RMB27.4 billion in Q3 FY25, representing a 36.2% year-over-year decline from RMB42.9 billion in Q3 FY24. The contraction was primarily driven by lower vehicle deliveries, which declined 39.0% YoY to 93,211 units from 152,831 units in the prior-year quarter. Vehicle sales revenue decreased 37.4% YoY to RMB25.9 billion, reflecting softer volumes amid a competitive market environment and product transition phase.
Product Mix and Sales Composition: Vehicle sales remained the dominant contributor to overall revenues, accounting for approximately 94.5% of total revenues in Q3 FY25. Other sales and services revenue remained relatively stable at RMB1.5 billion compared to RMB1.6 billion in Q3 FY24, demonstrating resilience in ancillary revenue streams despite lower vehicle volumes.
Profitability and Margin Profile: Gross profit declined sharply by 51.6% YoY to RMB4.5 billion from RMB9.2 billion in Q3 FY24. Gross margin contracted to 16.3% from 21.5% in Q3 FY24. Vehicle margin decreased to 15.5%, compared with 20.9% in the prior-year quarter, primarily due to lower production volumes and estimated recall-related costs associated with the Li MEGA model. Excluding recall costs, vehicle margin would have been 19.8%, indicating underlying operational resilience.
Operating Cost Structure: Operating expenses totaled RMB5.6 billion in Q3 FY25, reflecting a marginal 2.5% YoY decline. Research and development expenses increased 15.0% YoY to RMB3.0 billion, driven by new vehicle programs and expanded technology investments. Selling, general, and administrative expenses declined 17.6% YoY to RMB2.8 billion, largely due to lower share-based compensation expenses compared with the prior-year quarter.
Earnings Performance and Bottom-Line Impact: The Company reported an operating loss of RMB1.2 billion in Q3 FY25, compared to operating income of RMB3.4 billion in Q3 FY24. Operating margin turned negative at (4.3%), compared with a positive 8.0% in the prior-year period. Net loss stood at RMB624.4 million versus net income of RMB2.8 billion in Q3 FY24. Diluted net loss per ADS was RMB0.62, compared with diluted earnings per ADS of RMB2.66 in Q3 FY24.
Cash Flow and Liquidity Position: Net cash used in operating activities amounted to RMB7.4 billion in Q3 FY25, compared with RMB11.0 billion generated in Q3 FY24. Free cash flow turned negative at RMB8.9 billion versus positive RMB9.1 billion in the prior-year quarter. Despite operating cash outflows, the Company maintained a strong cash position of RMB98.9 billion as of September 30, 2025, providing financial flexibility to support strategic initiatives and product expansion.
Balance Sheet Strength and Capital Structure: Total assets stood at RMB153.1 billion as of September 30, 2025, while total shareholders’ equity increased to RMB73.2 billion. Total liabilities declined to RMB79.9 billion from RMB91.0 billion as of December 31, 2024, reflecting improved balance sheet positioning despite near-term profitability pressures.
Considering recent key business, financial updates, current trading levels, and key business risks, a ‘Buy’ recommendation has been given to Li Auto Inc. (NASDAQ: LI) at the current market price of USD 18.47, as on Feb 24,2026 at 7:09 am PST
Data Powered by EOD Historical Data (“EODHD”).
Sector: Consumer Cyclical Industry: Auto Manufacturers
| Company | Change (USD) | Price (USD) | Trailing PE (x) | Forward PE (x) | Price Sales TTM (x) | Price to Book Value (x) | Enterprise Value to Revenue (x) | Enterprise Value to EBITDA (x) |
|---|---|---|---|---|---|---|---|---|
| LI Li Auto Inc |
-0.37 2.72% | 13.21 | 13.41 | 20.96 | 0.24 | 3.54 | 0.14 | 1.69 |
| TSLA Tesla Inc |
4.11 1.04% | 400.49 | 45.91 | 67.57 | 5.67 | 8.35 | 12.42 | 58.23 |
| TOYOF Toyota Motor Corp |
- -% | 17.50 | 8.97 | 9.44 | 0.0059 | 1.11 | 0.0097 | 0.05 |
| TM Toyota Motor Corporation ADR |
1.17 0.68% | 173.94 | 8.87 | 9.34 | 0.0052 | 1.07 | 1.27 | 6.98 |
| BYDDY BYD Co Ltd ADR |
- -% | 10.29 | 27.15 | 20.49 | 0.18 | 3.56 | 1.12 | 7.45 |
Data Powered by EOD Historical Data (“EODHD”).
Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.
Related Risks: This report may be looked at from high-risk perspective and recommendations are provided are for a short duration. Recommendations provided in this report are solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc.
Note 1: Past performance is not a reliable indicator of future performance.
Note 2: The reference date for all price data, currency, technical indicators, support, and resistance levels as on February 24, 2026. The reference data in this report has been partly sourced from REFINITIV.
Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned has been achieved and is subject to the factors discussed above.
Note 4: StockNextt reports are prepared based on the stock prices captured either from REFINITIV or Trading View. Typically, REFINITIV or Trading View may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.
Support: A level at which the stock prices tend to find support if they are falling, and a downtrend may take a pause backed by demand or buying interest. Support 1 refers to the nearby support level for the stock and if the price breaches the level, then Support 2 may act as the crucial support level for the stock.
Target: A level at which the stock prices tend to find resistance when they are rising, and an uptrend may take a pause due to profit booking or selling interest. Target 1 refers to the nearby resistance level for the stock and if the price surpasses the level, then Target 2 may act as the crucial resistance level for the stock.
Stop-loss: It is a level to protect further losses in case of unfavourable movement in the stock prices.
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