Shares in Li Auto soared on Wednesday despite the Chinese electric automaker announcing a slide back into loss and admitting its self-driving technology is not as good as that of its rivals.
The strong one-day rise indicates that investors see potential in the Nasdaq-listed automaker, which beat expectations but still posted a net loss of 360 million yuan ($56 million) for the first quarter, reversing the 107.5 million yuan net profit it booked in the prior quarter and widening its 77.1 million yuan loss from the same period last year.
Revenue was 3.58 billion yuan, more than triple that in the pandemic-hit first quarter of 2020, according to the company’s unaudited earnings published before the start of Wednesday trade.
Li shares closed up 14.16% at $22.82 on Wednesday. Alongside China’s other two U.S.-listed EV makers — Nio and Xpeng — the company has seen its stock price fall dramatically this year due in part to a production slowdown caused by the global semiconductor shortage.
Compared with the previous quarter, sales fell by 13% to 12,579 vehicles, with the company attributing the decline to the pandemic and China’s Lunar New Year national holiday.
Li Auto also said it expects to deliver between 14,500 and 15,000 vehicles in the three months through June. It currently only produces the plug-in hybrid Li One SUV, though it plans to release another sport utility vehicle next year and a pure electric model in 2023.
Like its EV rivals, Li struggles to profit from vehicle sales alone. Chief Financial Officer Li Tie said during a February earnings call that net gains were mainly earned through investments in short-term financial products.
Other Chinese automakers have sought extra income through selling proprietary autonomous driving technology. But Li Auto is bearish on that option, with co-founder Shen Ya’nan saying on Wednesday the company needs to “do more homework” to bring its offerings to the same standard as domestic peer Nio and global leader Tesla.
Despite recent upticks brought on by promising earnings, stock prices this year of both Nio and compatriot Xpeng have plunged by around 25% and 33%, respectively, due in part to disruption in global chip supplies.
Li Auto shares are also down by around 33% over the same period.
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