Shares of Chinese electric vehicle maker Li Auto Inc. (LI) plunged 13.89% on October 31, 2024, after the company reported disappointing third-quarter earnings and provided weaker-than-expected guidance for the fourth quarter.
For the third quarter of 2024, Li Auto reported revenue of $6.11 billion, missing analysts' consensus estimate of $41.67 billion. The company's adjusted earnings per American Depositary Share (ADS) of $0.52 also fell significantly short of the expected $2.31.
While Li Auto's vehicle deliveries grew 45% year-over-year in Q3, its revenue growth was much lower at 24%, indicating the impact of lower average selling prices amid intense competition in the Chinese EV market. The company's gross margin also declined to 21.5% from 22% a year earlier, as it had to cut prices on flagship models and introduce its new L6 SUV at a low price point.
Looking ahead to the fourth quarter, Li Auto expects to deliver between 160,000 and 170,000 vehicles, generating revenue in the range of $6.2 billion to $6.5 billion. However, analysts had projected higher revenue of $6.71 billion for the quarter, according to FactSet data.
"The soft guidance has raised concerns about the company's sales pressure in the fourth quarter and is weighing on market sentiment," said Angus Chan, an auto analyst at Bocom International.
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