Li Auto (LI) is back in focus after its stock gained more than 4% in pre market trading, with investors reacting to growing interest in the upcoming Li Auto L9 Livis launch.

Beyond the pre market jump, Li Auto’s 1 day share price return of 4.83% and 7 day share price return of 5.54% come after a year to date share price gain of 9.39%. However, the 1 year total shareholder return is down 33.51% and longer term total shareholder returns also remain weak, which suggests recent optimism around the new model launch and ongoing buybacks is only starting to rebuild confidence after a tougher stretch.

If you are looking at Li Auto’s story and wondering what else might be on your radar in related areas, this could be a good moment to scan 33 robotics and automation stocks

With the stock up in the short term but longer term returns still weak, and with buybacks and a new model cycle now in play, the key question is whether Li Auto is still undervalued or if markets are already pricing in future growth.

Most Popular Narrative: 14.8% Undervalued

Based on the most followed narrative, Li Auto's fair value of $22.16 sits above the last close of $18.87, putting fresh focus on how the new model cycle and spending plans feed into that gap.

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.

Want to see what kind of revenue ramp, margin profile, and future profit multiple underpin that fair value gap? The narrative spells out a detailed earnings and cash flow path, including how much profit expansion is assumed, how fast sales need to grow, and what valuation multiple has to hold up in a crowded EV market.

Result: Fair Value of $22.16 (UNDERVALUED)

However, this upbeat narrative still runs into clear friction from high R&D and capital spending needs, as well as intense competition that could keep margins and sales under pressure.

Another View: Expensive on Earnings

While the narrative points to a fair value of $22.16, Li Auto’s current valuation on earnings looks stretched. The stock trades on a P/E of 123x, compared with 24.4x for peers, 18.9x for the global auto sector, and a fair ratio estimate of 38.5x. This signals meaningful valuation risk if sentiment cools.

Next Steps

With sentiment clearly split between potential upside and clear risks, this is a good time to move quickly, review the numbers, and form your own view using our breakdown of 1 key reward and 1 important warning sign

Looking for more investment ideas?

If Li Auto is on your watchlist already, do not stop there. This is the moment to widen your search and see what else could sharpen your portfolio.

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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.