Chinese electric vehicle maker Li Auto reported solid fourth quarter numbers Thursday, sending its American depositary receipts higher in premarket trading. First quarter delivery guidance, however, looks a little light.
Fourth-quarter results were a little confusing, but good. Li (ticker: LI) reported $636 million in sales. Analysts projected $604 million in sales. The company reported a loss from operations but positive net income. Still, the loss from operations was about $12 million, smaller than expected. What’s more, Li earned about 2 cents a share, about a nickel better than the 3 or 4 cent loss analysts were projecting.
The company was able to produce a bottom line profit from an operating loss because of the required accounting for some of the securities associated with Li.
Li also generated positive free cash flow in the fourth quarter. Investors like it when young companies demonstrate the ability to be self-funding–generating the cash needed to grow from their own operations.
“Against the backdrop of a once-in-a-century shift in the automotive industry to smart electric vehicles, the fourth quarter capped off a year of significant growth for our company,” said founder and CEO Xiang Li in the company’s news release. Li delivered more than 14,000 vehicles in the fourth quarter, up 67% year over year. “This outstanding performance was fueled by strong demand driven by our distinctive product offering and superior user experience.”
Looking ahead, Li expects to deliver about 11,000 vehicles in the first quarter. That’s a decline from the fourth quarter and will make it harder for the company to hit 2021 sales projections from analysts. Guidance will be a topic for the coming conference call. Management hosts a call at 7:30 a.m. Eastern time for investors and analysts.
Li shares were up about 3% in premarket trading. S&P 500 and Dow Jones Industrial Average futures, for comparison, are flat.
The earnings look like a relief for investors. Li stock, like other EV stocks, has had a rocky ride lately. Shares as of Wednesday’s close are down about 11% month to date.
Write to Al Root at allen.root@dowjones.com
Li Auto Earnings Were Good. Pay Attention to Delivery Guidance. - Barron's
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