What came about
Shares of Chinese language electrical automobile (EV) manufacturer Li Auto (NASDAQ:LI) went on a rush remaining one year, nearly tripling in model between July and November — however it has been all downhill since. On Thursday, the toddle continued within the wake of the company’s fourth-quarter earnings file. Its shares closed the shopping and selling session down by 9.8%.
But turned into the Q4 file basically as infamous as all that?
Picture offer: Getty Pictures.
Li Auto grew its automobile gross sales by 65% one year over one year in Q4, intriguing $622 million price of metal, and its total gross sales of $635.5 million were up by a an identical 65%. Inform turned into, the company earned slimmer detrimental margins on those gross sales, down 230 basis capabilities sequentially to 17.5%. The company reported an working loss of $12 million — however a rep profit of $16.5 million for the quarter.
Most interesting of all, Li Auto says it generated $245 million in free money jog.
For the one year, gross sales totaled $1.45 billion, the company’s working loss turned into $103 million, and on the underside line, the company suffered a rep loss of $23 million. What I also can argue is the extra significant metric, even though — free money jog — turned into at $378 million for the one year.
Li Auto predicts that within the main quarter of 2021, this can say between 10,500 and 11,500 autos — cease to a 300% elevate over its Q1 2020 performance. Revenue growth must be an identical — someplace between $450 million and $494 million equating to as much as 279% growth.
That sounds love lawful news to me. The subject with Li Auto, even though, is now not always its growth charge, however its valuation. Even valuing the stock on free money jog (of which it has plenty) moderately than rep earnings (which it lacks), with a market capitalization of $23.2 billion, Li Auto is shopping and selling at a staggering 61 occasions its annual free money jog. Granted, if the company succeeds in rising gross sales, earnings, and free money jog at triple-digit-percentage rates for years on stop, it will also snappy grow into that valuation.
What worries me when intelligent a couple of stock this recent, even though, is … what if it would’t?
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Rich Smith has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.”>