A Fresh Look at Li Auto (NasdaqGS:LI) Valuation Following Internal Shakeups and Quality Initiatives

Li Auto (NasdaqGS:LI) is in focus after a series of internal accountability measures and operational actions following recalls and vehicle quality incidents. The company’s rapid response, including employee terminations and a new LiDAR partnership, signals evolving priorities.

See our latest analysis for Li Auto.

Li Auto’s recent operational shakeups come amid a backdrop of notable volatility for shareholders. After starting the year on a strong note, momentum has faded, with a 1-year total shareholder return of -18.0%. The share price has dropped over 22% since January, indicating that both quality concerns and shifting market sentiment are weighing on the stock. However, the company’s long-term total shareholder return remains positive over three years.

Curious how other automakers are navigating similar industry changes? Now is a perfect time to discover See the full list for free.

With the stock now sitting well below recent analyst targets and fundamentals showing double-digit revenue and profit growth, investors face a key question: is Li Auto undervalued now, or is the market already pricing in future gains?

Most Popular Narrative: 34.9% Undervalued

Li Auto’s most-followed narrative sets its fair value at $28.70, which is well ahead of the last close at $18.68. This valuation points to significant upside, as the narrative claims Li Auto is pricing in earnings and margin expansion over coming years.

"Aggressive investment in proprietary intelligent driving systems (e.g., the VLA driver model and in-house AI chips), and the rapid rollout of these features across the lineup are expected to unlock high-margin, recurring software and services revenue, enhancing net margins and supporting premium product positioning."

Read the complete narrative.

Want to know the numbers fueling this bold target? The story hinges on a transformation: think surging revenue, margin gains, and a bet on premium tech adoption. Eager to see exactly what the narrative assumes happens next? Dive in for the projections analysts are using behind the scenes.

Result: Fair Value of $28.70 (UNDERVALUED)

Have a read of the narrative in full and understand what's behind the forecasts.

Still, heightened spending pressures or intensified competition could disrupt Li Auto’s growth trajectory and challenge the bullish narrative that underpins optimistic forecasts.

Find out about the key risks to this Li Auto narrative.

Build Your Own Li Auto Narrative

If you see things differently or want to follow your own research path, you can build a personalized view in just a few minutes. Do it your way

A good starting point is our analysis highlighting 3 key rewards investors are optimistic about regarding Li Auto.

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This article by Simply Wall St is general in nature. We provide commentary based on historical data and analyst forecasts only using an unbiased methodology and our articles are not intended to be financial advice. It does not constitute a recommendation to buy or sell any stock, and does not take account of your objectives, or your financial situation. We aim to bring you long-term focused analysis driven by fundamental data. Note that our analysis may not factor in the latest price-sensitive company announcements or qualitative material. Simply Wall St has no position in any stocks mentioned.

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