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Stocks of Chinese electric vehicle (EV) manufacturers lee auto (Nasdaq:Li) is down nearly 10% today due to a loss in revenue and a change in the company’s key management.
Li Auto reported third quarter sales of $1.31 billion. That’s a 20% increase for him from the year-ago quarter, but third-quarter earnings fell short of analyst estimates of $1.4 billion.
At the same time, the company announced that President and Director Yanan Shen has resigned. Li Automobile has promoted chief engineer Donghui Ma to president and appointed him to the board of directors effective January 1, 2023.
LI’s stock is down 32% this year, trading at $22 a share.
What Happened to the LI Stock
Li Auto reported a third-quarter loss of 18 cents per share. That topped Wall Street’s expected loss of 15 cents a share for him. Also, quarterly deliveries fell 7.5% for him, and gross profit fell 34.8% year-over-year to $166.2 million for him.
Li Auto announced that its operating loss increased by $299.4 million in the third quarter of this year. Quarterly earnings were bad enough to force Shen to resign and appoint a new leader at the automaker.
why it matters
With a population of 1.4 billion, China is the world’s largest automobile market and is of strategic importance when it comes to electric vehicles. Li Auto is considered a leader in the Chinese domestic market and Chinese EV manufacturers.
The company’s poor performance and management turnover show how much China’s auto market is slowing amid Covid-19 lockdowns and slowing economic growth. The production and sales of electric vehicles are cooling down rapidly along with the global economy.
what’s next
Investors have reacted very negatively to Li Auto’s reported third quarter performance slump, with a management turnover creating uncertainty for the company and its near-term direction. LI’s share price could fall further until there is clear evidence that Li Auto is fixing its finances and management is putting the company on a better trajectory.
On the day of publication, Joel Baglole I did not have any positions (directly or indirectly) in any of the securities mentioned in this article. The opinions expressed in this article are those of the subject author of InvestorPlace.com. Publication guidelines.
