Top
Image Alt

The Investing Box

  /  Editor's Pick   /  If I invested £200 in Li Auto shares 2 years ago, here’s how much I’d have now!

If I invested £200 in Li Auto shares 2 years ago, here’s how much I’d have now!

Close up view of Electric Car charging and field background

Li Auto (NASDAQ:LI) shares have demonstrated considerable volatility in 2022. The firm, among China’s most promising EV manufacturers, recently released its second, long-awaited car — the L9.

The L9 truly highlights why we need to be taking note of developments in the Chinese EV market. Li claims that the L9 is the best SUV on the market, better than the Bentley Bentayga, any Range Rover, or the Rolls Royce Cullinan.

That’s a big claim considering the car only costs $70,000 — a fraction of its peers. But some reviewers think Li might have a point.

So, let’s take a closer look at Li Auto.

Past performance

Li Auto was founded in 2015 and was listed on the NASDAQ in July 2020. So how has the stock faired since its launch?

Well, the company priced 95m million American Depositary Shares at $11.5 per share, which was higher than the expected range of $8 to $10 per share. But the stock quickly rose, and eventually reached nearly $40 a share in late November.

So, if I had bought Li Auto shares two years ago, how much would I have now?

Well, two years ago today, Li Auto was trading around $38, near its peak, and just more than double the current share price. If I’d invested $200 in the stock, today I’d have $96.

However, I need to take into account exchange rate changes. Two years ago, £200 would have got me $260. So today, that $260 of Li Auto stock would be worth $124. In turn, $124 is worth £104 at today’s exchange rate. So, the weak pound would have saved me on my losses.

Why I’m buying now

Li Auto, like its Chinese peers, have struggled in 2022. China’s ongoing battle with Covid has impacted production and the supply chain. Deliveries have suffered as a result and the growth experienced in previous years has not been sustained.

The Chinese government is largely responsible for the turmoil. Li delivered just 4,571 EVs in August. The 56% month-on-month decline in deliveries was attributed to Covid-19 and supply chain restraints.

Despite this, Li could be the first EV-maker — with the exception of Tesla — to turn a profit and it could do it this year.

I also see the L9 as being central to this profitability. The SUV comes with two electric engines and one petrol, delivering the driver an astonishing 1,100-km range. The $70,000 EV comes with a wealth of tech, including sizeable infotainment displays controlled by 3DToF hand/finger tracking cameras.

Another reason I’m buying Li Auto is because of its valuation relative to its peers. Li roughly has a price-to-sales (P/S) ratio comparable with NIO and XPeng — three. However, its P/S is a fraction of this of Tesla (eight) or Rivian (30).

The post If I invested £200 in Li Auto shares 2 years ago, here’s how much I’d have now! appeared first on The Motley Fool UK.

6 shares that we think could be the biggest winners of the stock market crash

The hotshot analysts at The Motley Fool UK’s flagship share-tipping service Share Advisor have just unveiled what they think could be the six best buys for investors right now.

And while timing isn’t everything, the average return of their previous stock picks shows that it could pay to get in early on their best ideas – particularly in this current climate!

What’s more, all six ‘Best Buys Now’ are available to access right now, in just a few clicks.

Learn more

setButtonColorDefaults(“#5FA85D”, ‘background’, ‘#5FA85D’);
setButtonColorDefaults(“#43A24A”, ‘border-color’, ‘#43A24A’);
setButtonColorDefaults(“#FFFFFF”, ‘color’, ‘#FFFFFF’);
})()

More reading

James Fox has positions in Nio Inc. The Motley Fool UK has recommended Tesla. Views expressed on the companies mentioned in this article are those of the writer and therefore may differ from the official recommendations we make in our subscription services such as Share Advisor, Hidden Winners and Pro. Here at The Motley Fool we believe that considering a diverse range of insights makes us better investors.