Li Auto (NASDAQ: LI) and Nio (NASDAQ: Nio) are leading Chinese electric vehicle companies with a market cap of over $27 billion and $13 billion, respectively. The two companiews manufacture and sells premium cars mainly in the Chinese market. While Nio is the best-known of the two, this article will explain why Li Auto is a better investment.
Li Auto vs Nio
One of the top EV news of this week was the latest unaudited results by Li Auto. The results showed that the company delivered 52,584 vehicles in the first quarter of the year. That was a 65.2% increase compared with the same quarter in 2022.
As a result, the company’s revenue jumped to $2.7 billion, which was a 95.6% increase from the same quarter last year. Unlike other EVs like Tesla that are slashing prices, Li Auto attributed the higher revenue figures to higher prices and volume.
Li Auto also boosted its forward guidance. It now expects that its deliveries will be between 76,000 and 81,000. Also, it sees the revenue coming in between $3.53 billion and $3.77 billion. The statement added:
“This business outlook assumes supportive macroeconomic conditions, no significant disruptions in the supply chain and reflects the company’s current and preliminary view on its business situation and the market condition, which is subject to change.”
Therefore, in this case, Li Auto seems lik a better company than Nio because of its faster growth in the premium market and the fact that it achieved profitability. Analysts expect that the company’s revenue for the year will be $13.60 billion while the earnings per share will come in at 34 cents. Nio, on the other hand, is expected to break even in 2026.
Li Auto’s profitability gives it scale that it needs to expand internationally in the future. Further, Li Auto has higher gross margin of 19% compared to Nio’s 10.53%. It also generates a higher revenue per employee than Nio and has a better balance sheet.
Li Auto stock price forecast
Li Auto’s technicals are also supportive. As shown above, the shares managed to move above the key resistance point at $27.33 after it published its financial results. This was an important level since it was the highest point on February 1. The shares also moved to the 61.8% Fibonacci Retracement level and the 50-day exponential moving average (EMA).
Therefore, I suspect that the shares will continue rising as buyers target the next psychological level at $35. A drop below the support at $27 will invalidate the bullish view.
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