Stock Analysis

Breakeven Is Near for Li Auto Inc. (NASDAQ:LI)

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We feel now is a pretty good time to analyse Li Auto Inc.'s (NASDAQ:LI) business as it appears the company may be on the cusp of a considerable accomplishment. Li Auto Inc., through its subsidiaries, designs, develops, manufactures, and sells new energy vehicles in the People’s Republic of China. With the latest financial year loss of CN¥321m and a trailing-twelve-month loss of CN¥2.0b, the US$25b market-cap company amplified its loss by moving further away from its breakeven target. The most pressing concern for investors is Li Auto's path to profitability – when will it breakeven? Below we will provide a high-level summary of the industry analysts’ expectations for the company.

See our latest analysis for Li Auto

Li Auto is bordering on breakeven, according to the 32 American Auto analysts. They anticipate the company to incur a final loss in 2022, before generating positive profits of CN¥1.0b in 2023. Therefore, the company is expected to breakeven roughly a year from now or less! At what rate will the company have to grow in order to realise the consensus estimates forecasting breakeven in under 12 months? Using a line of best fit, we calculated an average annual growth rate of 56%, which is extremely buoyant. Should the business grow at a slower rate, it will become profitable at a later date than expected.

NasdaqGS:LI Earnings Per Share Growth February 8th 2023

Underlying developments driving Li Auto's growth isn’t the focus of this broad overview, but, take into account that generally a high forecast growth rate is not unusual for a company that is currently undergoing an investment period.

Before we wrap up, there’s one aspect worth mentioning. The company has managed its capital judiciously, with debt making up 22% of equity. This means that it has predominantly funded its operations from equity capital, and its low debt obligation reduces the risk around investing in the loss-making company.

Next Steps:

There are too many aspects of Li Auto to cover in one brief article, but the key fundamentals for the company can all be found in one place – Li Auto's company page on Simply Wall St. We've also compiled a list of relevant factors you should further examine:

  1. Valuation: What is Li Auto worth today? Has the future growth potential already been factored into the price? The intrinsic value infographic in our free research report helps visualize whether Li Auto is currently mispriced by the market.
  2. Management Team: An experienced management team on the helm increases our confidence in the business – take a look at who sits on Li Auto’s board and the CEO’s background.
  3. Other High-Performing Stocks: Are there other stocks that provide better prospects with proven track records? Explore our free list of these great stocks here.

What are the risks and opportunities for Li Auto?

Li Auto Inc., through its subsidiaries, designs, develops, manufactures, and sells new energy vehicles in the People’s Republic of China.

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  • Earnings are forecast to grow 49.47% per year


No risks detected for LI from our risks checks.

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