Li Auto Shares Fall Sharply After U.S. Investment Bank Trims Target Price

By Tracy Qu

Li Auto shares fell sharply in Hong Kong trading after a leading U.S. investment bank cut its target price on the stock and lowered its sales estimates.

Shares of the Chinese electric-vehicle maker, which is also listed in the U.S., fell as much as 9.85% to 125.30 Hong Kong dollars (US$16.02) on Tuesday. Li Auto's American depositary receipts slid 12% overnight.

BofA Securities cut its target price on Li Auto's ADRs to $55 from $60 while maintaining a buy rating on the stock. BofA also lowered its sales volume estimates for Li Auto by 6% and 4%, respectively, for 2024 and 2025, due to softer-than-expected orders for the company's new MEGA car model.

MEGA, Li Auto's first fully electric model, was launched at a price tag of 559,800 yuan (US$77,769) earlier this month.

Nomura auto analyst Joel Ying said Li Auto's share-price drop was mainly related to a brokerage cutting its target price on the stock in the U.S., referring to BofA's move.

Ke Qu, an auto-sector analyst at CCB International Securities, said the share-price decline was triggered by lower-than-expected new orders for the MEGA [multipurpose vehicle]. Qu noted a Chinese media report saying that Li Auto only had 4,000 nonrefundable MEGA orders in the first 15 days of the model's launch.

Nomura's Ying said the market might be overreacting to news regarding the MEGA model, given that the model's sales is unlikely to contribute much to Li Auto's overall full-year shipment target.

The L series extended range EVs still make up the majority of the carmaker's 2024 shipment targets, Ying said.

"If Li Auto can maintain a solid momentum on L series, [for example,] if they can achieve close to 50,000 sales in March 2024, I am expecting positive feedback from the market," Ying said.

Write to Tracy Qu at tracy.qu@wsj.com

(END) Dow Jones Newswires

March 19, 2024 02:33 ET (06:33 GMT)

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