Yahoo Finance Investors in Li Auto (NASDAQ:LI) have unfortunately lost 10% over the last year
It's understandable if you feel frustrated when a stock you own sees a lower share price. But sometimes a share price fall can have more to do with market conditions than the performance of the specific business. The Li Auto Inc. (NASDAQ:LI) share price is down 10% in the last year. However, that's better than the market's overall decline of 16%. Li Auto hasn't been listed for long, so although we're wary of recent listings that perform poorly, it may still prove itself with time.
It's worthwhile assessing if the company's economics have been moving in lockstep with these underwhelming shareholder returns, or if there is some disparity between the two. So let's do just that.
See our latest analysis for Li Auto
Because Li Auto made a loss in the last twelve months, we think the market is probably more focussed on revenue and revenue growth, at least for now. When a company doesn't make profits, we'd generally expect to see good revenue growth. Some companies are willing to postpone profitability to grow revenue faster, but in that case one does expect good top-line growth.
In the last twelve months, Li Auto increased its revenue by 140%. That's well above most other pre-profit companies. Given that the broader market is down the 10% drop last year isn't too bad. Given the strong revenue growth, it may simply be that the stock is suffering from market conditions. For us, this sort of situation smells of opportunity - the share price is down but the revenue is up. Either way, we'd say the mismatch between the revenue growth and the share price justifies a closer look.
You can see below how earnings and revenue have changed over time (discover the exact values by clicking on the image).
Li Auto is a well known stock, with plenty of analyst coverage, suggesting some visibility into future growth. If you are thinking of buying or selling Li Auto stock, you should check out this free report showing analyst consensus estimates for future profits.
A Different Perspective
It's not great that Li Auto shares failed to make money for shareholders in the last year, but the silver lining is that the loss of 10%, wasn't as bad as the broader market loss of about 16%. Things weren't so bad until the last three months, when the stock dropped 18%. It's always a worry to see a share price decline like that, but at the same time, it is an unavoidable part of investing. However, this could create an opportunity if the fundamentals remain strong. Most investors take the time to check the data on insider transactions. You can click here to see if insiders have been buying or selling.
But note: Li Auto may not be the best stock to buy. So take a peek at this free list of interesting companies with past earnings growth (and further growth forecast).
Please note, the market returns quoted in this article reflect the market weighted average returns of stocks that currently trade on US exchanges.
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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.
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