Please ensure Javascript is enabled for purposes of website accessibility

Why Li Auto Stock Is Surging This Week

By John Rosevear – Aug 26, 2020 at 12:54PM

You’re reading a free article with opinions that may differ from The Motley Fool’s Premium Investing Services. Become a Motley Fool member today to get instant access to our top analyst recommendations, in-depth research, investing resources, and more. Learn More

Wall Street is taking a closer look at this recently public electric-vehicle specialist. So far, analysts like what they see.

What happened

Shares of Chinese electric-vehicle maker Li Auto (LI -2.54%) were up for the third consecutive session on Wednesday, after two Wall Street banks initiated coverage with bullish ratings. 

As of 12:15 p.m. EDT, Li's American depositary shares were up about 11.7% from Tuesday's closing price, and 35% higher since the end of last week. 

So what

Since Li Auto's first day of trading on July 30, shares of the maker of premium electric SUVs have so far followed the upward path blazed in recent months by domestic rival NIO's stock. Now, Wall Street is taking notice.

Last weekend, Goldman Sachs analyst Fei Fang declared Li Auto a "conviction buy," initiating coverage with a buy rating and assigning a price target of $20.60.

Fang told auto investors that Li is differentiating itself from its Chinese rivals with "compelling" consumer experiences. Its Li One SUV, introduced in November 2019, is "the first step in a larger innovation plan" that could drive its shares significantly higher over time, he wrote. 

A blue Li One, an upscale electric crossover SUV.

The Li One includes an on-board gasoline-fueled generator to recharge its battery on the fly, extending the vehicle's range. That's a useful differentiator in parts of China where high-speed EV chargers are relatively scarce. Image source: Li Auto.

Fang has high expectations for Li Auto's growth: He sees its sales rising sharply, from about 30,000 vehicles this year to 445,000 vehicles in 2025. 

Now what

Fang isn't the only big-bank analyst to see great potential in Li Auto's business. On Monday, Morgan Stanley analyst Tim Hsaio initiated coverage with an overweight rating and a $20 price target. 

Hsaio wrote that the Li One hits "the sweet spot" of China's vehicle market (upscale SUVs) and that its extended-range platform -- which includes an on-board gasoline-fueled generator to recharge the battery, similar to General Motors' original Chevrolet Volt -- will help it differentiate itself, particularly in parts of China where high-speed electric-vehicle chargers aren't yet common.

John Rosevear owns shares of General Motors. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Invest Smarter with The Motley Fool

Join Over 1 Million Premium Members Receiving…

  • New Stock Picks Each Month
  • Detailed Analysis of Companies
  • Model Portfolios
  • Live Streaming During Market Hours
  • And Much More
Get Started Now

Stocks Mentioned

Li Auto Inc. Stock Quote
Li Auto Inc.
$25.72 (-2.54%) $0.67

*Average returns of all recommendations since inception. Cost basis and return based on previous market day close.

Related Articles

Motley Fool Returns

Motley Fool Stock Advisor

Market-beating stocks from our award-winning analyst team.

Stock Advisor Returns
S&P 500 Returns

Calculated by average return of all stock recommendations since inception of the Stock Advisor service in February of 2002. Returns as of 09/28/2022.

Discounted offers are only available to new members. Stock Advisor list price is $199 per year.

Premium Investing Services

Invest better with The Motley Fool. Get stock recommendations, portfolio guidance, and more from The Motley Fool's premium services.