Reassessing Li Auto (NasdaqGS:LI) Valuation After a Steep Multi‑Month Share Price Decline

Li Auto (NasdaqGS:LI) has been sliding lately, with the stock down about 15% over the past month and nearly 30% in the past 3 months, despite solid double digit revenue and earnings growth.

See our latest analysis for Li Auto.

Stepping back, the roughly 28% year to date share price decline and 24.6% one year total shareholder return slump suggest momentum has clearly faded, as investors reassess execution risks despite ongoing top line growth.

If Li Auto’s recent pullback has you rethinking your exposure to carmakers, it may be worth scanning other auto manufacturers that could offer a different balance of growth and risk.

With Li Auto trading well below analyst targets yet still delivering robust revenue and profit growth, the key question now is whether the recent slide signals an undervalued opportunity or a market that is bracing for slower future gains.

Most Popular Narrative Narrative: 29.5% Undervalued

With Li Auto’s fair value in the mid twenties versus a last close of $17.21, the most followed narrative argues the market is heavily discounting the company’s long term potential.

The company's ongoing transition from extended-range vehicles (EREVs) to pure battery electric vehicles (BEVs), including successful launches of the Li MEGA and Li i8, and the upcoming Li i6, positions Li Auto to capture expanding market share as Chinese middle class consumers upgrade and EV adoption accelerates, directly supporting long term revenue growth and total addressable market expansion.

Read the complete narrative.

Curious how shifting product mix, fatter margins, and a richer earnings multiple combine into that higher fair value? Want to see the full playbook behind those projections?

Result: Fair Value of $24.43 (UNDERVALUED)

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

However, sustained cash burn, along with fiercer EV competition and policy shifts in China, could quickly erode margins and derail that upbeat valuation path.

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

Another Angle on Valuation

On earnings, Li Auto screens less like a bargain. Its 26.4x price to earnings ratio sits above both the global auto average of 18.5x and peers at 23x, though still below a 28.9x fair ratio. This leaves investors to weigh upside potential against clear multiple compression risk.

See what the numbers say about this price — find out in our valuation breakdown.

Build Your Own Li Auto Narrative

If you see the story differently or want to test your own assumptions against the numbers, you can build a custom view in minutes, Do it your way.

A great starting point for your Li Auto research is our analysis highlighting 2 key rewards and 1 important warning sign that could impact your investment decision.

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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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