Strong Delivery Numbers and a New Model Make LI Stock a Buy

Li Auto (NASDAQ:LI) saw a month of incredible delivery numbers in June, and its future is only looking brighter. The Chinese electric vehicle (EV) market is firing on all cylinders. Sales are expected to grow by more than 50% this year according to a report from Canalys. It is estimated that 1.9 million EVs will be sold in China this year, and LI stock stands to benefit.

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With support from the Chinese Government and new initiatives from U.S. President Joe Biden, the EV market will soar to new highs and take LI stock along for the ride.

Currently, the stock is up 95% since it went public on July 30, 2020. Its price has been volatile since late last year. LI stock saw a high of $47 in November, bottomed out at $17 in May and now trades for about $30 per share.

I wrote about LI stock in the past and recommended a buy in May when it was trading at $18. If you purchased the stock, you are sitting on 68% gains. But if you didn’t buy some shares, it’s not too late to own LI stock.

Strong Delivery Numbers 

Li Auto’s impressive June delivery numbers are proof that the company is over the chip shortage and its stock is ready for a rebound.

The company delivered 7,713 Li ONE models, which is a 321% year-over-year (YOY) increase. This is considerably more than the number of EVs delivered by its rival XPeng (NYSE:XPEV). 

Sales quadrupled in June and Li Auto’s second-quarter deliveries increased 166% YOY. Total deliveries for the quarter stood at 17,575. The company’s new orders crossed 10,000 for the first time in June, which is no less than a feat. 

For Q2, the company estimated deliveries of 15,500. Li Auto far exceeded that forecast. Its Q2 revenue will reflect these strong delivery numbers and will prove the company can stand out in the crowded EV market. Li Auto expects monthly deliveries to reach 10,000 by September this year.  

Li Auto’s New Model

Automakers are unveiling new models to keep up with the changing demands of users. Li Auto opted to refresh its existing vehicle and unveiled a new Li One model in May. The vehicle has several upgrades, including a new powertrain system and an advanced driving assistance system.

The new Li One will also have an increased range and be more spacious than its predecessor. Deliveries of the car were scheduled to begin in June. 

Li Auto’s rivals have been working around the clock to introduce brand new models. Considering the huge success of Li One, the company did the right thing by unveiling an updated version of their existing vehicle. 

Demand for the Li One is increasing, and the next-generation SUV will be equipped with Lidar technology and Nvidia (NASDAQ:NVDA) Orin chips. Li Auto is consistently investing in research and development (R&D) and the results are evident in the technology and driving experience offered. 

LI Stock Can Outpace Its Competitors

I believe Li Auto is well-positioned in the industry and has a long way to go. Despite tough competition and a chip shortage, the company has managed to hit strong delivery numbers. It has a superior growth prospects compared to its rivals. 

I also believe Li Auto is very close to profitability and has a strong balance sheet. Q2 results will give a better estimate of the performance of the company. All in all, LI Stock is a great EV play. 

On the date of publication, Vandita Jadeja did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Vandita Jadeja is a CPA and a freelance financial copywriter who loves to read and write about stocks. She believes in buying and holding for long term gains. Her knowledge of words and numbers helps her write clear stock analysis.

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