Ahead of Li Auto Inc.’s (NYSE:LI) third-quarter earnings call, analyst sentiment for the Tesla Inc. (NASDAQ:TSLA) rival has turned bearish.
Biggest-Ever Revenue Decline
Analysts predict that the automaker will report its biggest-ever revenue decline, with sentiments showcasing an expected 38% year-on-year dip for the automaker, Bloomberg reported on Tuesday. The decline is expected to be Li Auto's steepest since its listing on the New York Stock Exchange in 2020.
Li Auto delivered over 93,211 vehicles in Q3, representing a 39% year-on-year decline. The analysts cite growing competition from the automaker's competitors in the EREV (Extended Range Electric Vehicle) sector as one of the main drivers of the sentiment, the report suggests.
Eugene Hsiao, an analyst cited in the report, said that rivals like Xpeng Inc. (NYSE:XPEV) and Xiaomi Corp (OTC:XIACF) (OTC:XIACY) had EREV models in the pipeline and that Li would need to "commit to a shift in product strategy" to increase its appeal among customers.
Li Auto's Previous Earnings Record
In Q2, the company reported a revenue of $4.2 billion, illustrating a 4.5% YoY decline, missing the analyst consensus of $4.4 billion for the quarter. The company also missed adjusted EPS of 19 cents, missing the analyst consensus of 24 cents.
Li Auto Layoffs, Hesai Deal
The news comes as Li Auto recently laid off multiple employees after its Mega MPV was recalled due to a battery fire risk, following reports that a vehicle was engulfed in flames after sparks emerged from its chassis. Li Auto recalled over 11,411 units of the vehicle, citing coolant leakage issues.
The automaker recently signed a deal with LiDAR maker Hesai Technology (NASDAQ:HSAI), which will now become the company's sole supplier of LiDAR technology. The agreement stipulates that Hesai will supply LiDAR tech to Li Auto for all of its upcoming models.
Li scores well on the Value metric, while offering satisfactory Growth, but poor Momentum. For more such insights, sign up for Benzinga Edge Stock Rankings today!
Price Action: LI surged 1.10% to $18.32 at market close, but slipped 0.17% to $18.29 during the after-hours session, according to Benzinga Pro data.
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