This Stock Just Got Downgraded By Macquarie On Rising Competition In Chinese Market – Do You Own It?

Macquarie analyst Eugene Hsiao downgraded Li Auto (LI) to ‘Underperform’ from ‘Neutral’ on Friday, citing rising competitive pressures.

The firm also lowered the price target to $21 from $28, implying a downside of about 10.5% from the stock’s closing price on Thursday.

Li looks set to miss "lagging" sell-side second-quarter estimates for revenue, while the third-quarter consensus volume estimate of 139,000 units "appears stretched," the analyst told investors. In addition, management needs to provide a clear strategy on how to reset growth ahead of the launch of the i6 SUV in September, which will be competing directly with "best-sellers" like the Tesla (TSLA) Model Y and Xiaomi YU7, the analyst said, as per TheFly.

On Stocktwits, retail sentiment around Li stock stayed unchanged within ‘bullish’ territory over the past 24 hours, while message volume rose from ‘low’ to ‘high’ levels.

A Stocktwits user termed Li the ‘Blackberry of the EV market.’

Another user expects the stock to soon fall below $20.

Li Auto is slated to report its second-quarter (Q2) earnings on August 28. In the three months through the end of June, Li delivered 111,074 vehicles, below its delivery outlook of 123,000 and 128,000 vehicles provided in May. However, the company updated its delivery outlook to about 108,000 units a few days before the close of the quarter, citing the temporary impact of the company’s sales system upgrade to support long-term growth.

Wall Street expects Li to report revenue of $4.5 billion for Q2, up from the $4.4 billion reported in the corresponding quarter of 2024, and adjusted earnings per share of $0.24, up from $0.20 reported in Q2 2024, according to Koyfin.

NASDAQ-listed shares of Li are down by 2% this year but up by about 12% over the past 12 months. 

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