How Li Auto stock has been moving recently

Li Auto (NasdaqGS:LI) has seen mixed share price moves recently, with a 0.7% decline over the past day, a 4.3% fall over the past week, and gains of about 10% over the past month.

Looking beyond the latest pullback, Li Auto’s share price return has been positive over the past quarter and year to date, while the one year total shareholder return is still negative. This suggests recent momentum has improved but longer term sentiment remains cautious.

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With Li Auto shares still down over the past year despite recent gains and the stock trading below some analyst targets, the key question is whether today’s price reflects a discount or whether the market is already pricing in future growth.

Most Popular Narrative: 17% Undervalued

Li Auto’s most followed narrative places fair value at $22.16, above the last close of $18.39, which sets up a valuation case built on future execution and product transition.

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.

Curious what revenue path, margin lift and future P/E multiple need to line up for that price to make sense? The narrative leans on meaningful earnings compounding, richer profitability and a valuation level above current sector averages, all discounted at a higher required return.

Result: Fair Value of $22.16 (UNDERVALUED)

However, heavy R&D and capital spending, together with intense competition in China’s NEV market, could pressure margins and weaken the case for that 17% undervaluation.

Another View: Valuation Looks Stretched On Earnings

The 17% undervalued narrative contrasts sharply with what the current P/E suggests. Li Auto trades on about 113.6x earnings, compared with 18.9x for the global auto industry, 34.3x for peers and a fair ratio of 34.1x. That is a wide gap, so is the risk skewed the other way?

Next Steps

With mixed signals on value and sentiment, this is a good moment to look at the numbers yourself and decide where you stand. You can start with the 1 key reward and 1 important warning sign.

Looking for more investment ideas?

If Li Auto has sharpened your focus, do not stop here; broaden your watchlist with other clear, data backed ideas that could reshape your portfolio.

• Spot potential value opportunities early by checking companies highlighted in the 60 high quality undervalued stocks.
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• Prioritise resilience and capital protection by scanning candidates in the 71 resilient stocks with low risk scores.

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.