To The Moon

$Li Auto(LI)$ is scheduled to report its Q2 2025 earnings on Thursday, August 28, 2025. The market's view is generally cautious, reflecting a challenging quarter for the company. The company already lowered its vehicle delivery outlook for Q2, citing a temporary sales system upgrade. This revision, along with rising competition in the premium EV market in China, has led to recent analyst downgrades.

Revenue: The consensus among analysts is that Li Auto will report Q2 revenue of approximately $4.48 billion.

Earnings Per Share (EPS): Non-GAAP earnings per share (EPS) around $0.24. This guidance implies a significant slowdown in growth compared to previous periods.

Summary of Li Auto's Fiscal Q1 2025 Earnings

Li Auto reported a mixed but largely positive fiscal Q1 2025, with total revenue reaching $3.6 billion, a modest 1.1% increase year-over-year. The company delivered 92,864 vehicles, marking a 15.5% year-over-year increase and coming in at the high end of their previous guidance. Notably, Li Auto maintained a stable vehicle gross margin of 19.8%, signaling its ability to manage costs amid intense competition. The company's net income also saw a 9.4% year-over-year increase.

However, a key point of concern was the significant sequential decline in revenue and deliveries, down 41.4% and 42.1% respectively from Q4 2024. This was primarily attributed to seasonal factors, but it underscored the volatility in the Chinese EV market. Free cash flow was also negative for the quarter.

The Lesson Learned from Q1 2025 Guidance

The primary lesson from Li Auto's Q1 2025 earnings guidance is that market share and growth trajectory are paramount for high-flying tech and EV companies, and any sign of weakness can trigger a swift investor backlash.

Following the Q1 report, Li Auto's stock experienced downward pressure because its guidance for Q2, while showing growth, was below analyst expectations. The company projected Q2 deliveries of 123,000 to 128,000 vehicles, a modest 13.3% to 17.9% year-over-year increase. More recently, the company lowered its full-year sales target from 700,000 to 640,000 units.

This downward revision of guidance highlighted a key concern for investors: the intense competition in the Chinese EV market is eating into Li Auto's market share and growth. Despite its historical success, the company is not immune to the price war and new model launches by rivals like BYD and NIO. The market's reaction demonstrated that for growth-dependent stocks, a perceived slowdown is often more impactful than a strong past performance. The lesson is that maintaining a positive growth narrative is critical, and a cautious outlook can be a strong negative catalyst, even if the company remains profitable.

Analysis of Q2 2025 Earnings Expectations

Delivery Deceleration: The company's vehicle deliveries for Q2 were 111,074, a meager 2.3% increase year-over-year. This is a stark contrast to competitors like NIO, which saw a 25.6% jump in deliveries. This slowdown is a primary concern for investors.

Competition and Market Share: Li Auto's market share in the premium PHEV SUV segment has reportedly dropped significantly, from 72% in Q2 2023 to 34% in Q2 2025. This highlights the intense competition from rivals and is a key risk factor.

Key Metrics Investors Should Watch

Vehicle Gross Margin: This is a crucial metric in the competitive EV space. While Li Auto has historically maintained higher margins than its rivals, investors will be watching to see if the increased competition and a changing product mix have put pressure on profitability.

Order Intake and Future Guidance: The Q2 results are in the past; the market's focus will be on Li Auto's outlook for Q3 and the remainder of the year. Any commentary on recent order intake, the performance of new models like the Li i8, and the upcoming Li i6 will be critical. The company's ability to provide a convincing path to re-accelerated growth is paramount.

Financial Health: Investors will monitor the company's cash position and balance sheet strength. While Li Auto is considered financially strong, its ability to fund new product development and expansion in a competitive environment is key.

Li Auto (LI) Price Target

Based on 26 analysts from Tiger Brokers offering 12 month price targets for Li Auto in the last 3 months. The average price target is $33.10 with a high forecast of $40.00 and a low forecast of $21.00. The average price target represents a 34.30% change from the last price of $24.65.

Short-Term Trading Opportunities Post-Earnings

Trading Li Auto post-earnings is highly risky due to the current negative sentiment and high volatility. The market's reaction will be extreme depending on whether the company's report validates or allays investor concerns.

Potential for a positive surprise: If Li Auto manages to beat on profitability metrics, such as gross margin, and provides an unexpectedly strong and confident outlook for future deliveries, the stock could see a significant short-term rally. This could be a bounce-back opportunity for traders.

Risk of a negative reaction: A miss on revenue or profitability, combined with weak guidance, could lead to a sharp sell-off. The current analyst downgrades and negative sentiment suggest a lower bar for a positive surprise but also a high risk of a "growth scare" if the report is disappointing. The stock's performance will be a direct reflection of whether the company can successfully navigate the intense competition in the Chinese EV market.

Technical Analysis - Exponential Moving Average (EMA)

As Li Auto have been plagued by many factors, and the competition threat seem to have taken a toll on its delivery number, and we are seeing negative momentum for this stock for quite some time, the bear are in control and though the share price have started to show signs of pushing above the 12-EMA, but that is not enough to gather investors confidence and sentiment.

We need to see a convincing plan in its earnings guidance on how they planned to regain momentum and also address the competition threat, though at this current share price, it is an attractive buy, I would hold on to see what the management say about the plan in its guidance, before deciding whether to take a position.

Summary

Li Auto (LI) is expected to report a challenging fiscal Q2 2025. The company has already lowered its vehicle delivery outlook to 108,000, representing a modest 2.3% year-over-year increase, signaling a significant slowdown in growth. The company’s market share in the premium PHEV segment has also reportedly dropped to 34% from 72% a year ago, highlighting intense competition.

Analysts project revenue of approximately $4.48 billion and EPS around $0.24. Key metrics to watch include vehicle gross margin to assess profitability pressures, and future guidance for Q3 and beyond. The market will be looking for a convincing plan to regain momentum and address the competitive threats. Given the negative sentiment, the stock is volatile, with a strong report potentially leading to a short-term rally, while any disappointment could trigger a sharp sell-off.

Appreciate if you could share your thoughts in the comment section whether you think Li Auto would be able to provide a convincing plan to regain market momentum and also address the competition threat as Q2 2025 reporting is deemed to be challenging.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.