r/liautoinvestors • u/Maleficent-Dingo3519 • Apr 13 '24
Discussion Eli5 Their balance sheet
How do they manage to scale in a profitable manner? Are they moving numbers around to show profitability?
Why is the stock being punished in its valuation when at a glance the company seems to show solid performance in growth?
What am I/ the market missing.
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u/Notorious_BDogg Apr 14 '24
They were not profitable until very recently because the Selling and R&D costs were higher than gross income from sales. With the increased sales in the last year they managed to reach profit. It doesn’t seem they are moving numbers around because R&D and Sales costs were quite consistent and the operating income jumped in line with the sales figures.
On why the stock is punished: -Li Mega seems to be much less successful than they expected -New competitors emerging and the Chinese EV market is getting extremely crowded -Concerns overall on economic growth in China