Exposed to lay off thousands of people, second-quarter guidance lower than expected, is Li Auto in its "darkest moment"?

According to the Zhitong Finance and Economics APP, in 2024, Li Auto (02015/LI.US) did not perform as well as expected. On May 20th, Li Auto released its first-quarter performance, with a total revenue of 25.6 billion RMB, a year-on-year increase of 36.4%. However, this leading profitable new energy vehicle manufacturer turned back to a loss in operating profit in the first quarter. More importantly, the numbers provided by Li Auto for vehicle deliveries in the second quarter are much lower than market expectations.

Specifically, based on Li Auto's disclosed first-quarter performance, its operating income increased by 36.4% year-on-year to 25.63 billion RMB, slightly higher than analysts' expected 25.42 billion RMB, but this is the slowest first-quarter growth in the past three years. At the end of February this year, Li Auto announced its full-year 2023 performance, expecting first-quarter revenue this year to be between 31.25 billion RMB and 32.19 billion RMB, an increase of 66.3% to 71.3% compared to the first quarter of 2023. However, the actual situation is far below expectations.

In terms of gross profit margin, although Li Auto's gross profit margin remains above 20%, it decreased by 2.9 percentage points compared to 23.5% in the fourth quarter of last year. According to Li Auto's official explanation, one of the reasons for the decline in gross profit margin is the change in pricing strategy in the first quarter, leading to a decrease in average selling price.

In fact, the market had some expectations for the decline in Li Auto's gross profit margin. CICC recently predicted in a research report that Li Auto's first-quarter gross profit margin would decline to 20.3%, mainly due to price reductions for its L7, L8, and L9 old models, resulting in a decline in average selling price (ASP).

In addition, Li Auto's net profit attributable to shareholders for the first quarter was 593 million RMB, a year-on-year decrease of 36.26% and a nearly 90% decrease from the previous quarter. This key data is far below Wall Street analysts' expectations of 1.63 billion RMB.

As for the performance guidance provided by Li Auto for the second quarter of this year, revenue is expected to be between 29.9 billion RMB and 31.4 billion RMB, with deliveries expected to be between 105,000 and 110,000 vehicles. However, market estimates for its second-quarter delivery volume were around 130,700 vehicles.

In April this year, Li Auto delivered 25,800 vehicles. In other words, this automaker needs to achieve an average delivery volume of 39,600 vehicles in May and June to meet expectations.

It is worth noting that at the end of April, Li Auto once again announced a price reduction across its entire lineup. In the new pricing system, Li Auto made comprehensive adjustments to the prices of L7, L8, and L9 models, with price reductions ranging from 18,000 to 20,000 RMB MEGA, which was previously controversial, has directly reduced its price by 30,000 yuan.

Li Auto has stated that with the dual effect of a new pricing system and a richer product portfolio, the order volume increased rapidly in late April. "As it takes some time for orders to be delivered, it is expected that the delivery volume in May will show better performance."

According to the original plan, the next three pure electric vehicle models after MEGA will be launched in the second half of this year. Regarding the adjustment of the subsequent pure electric vehicle models, Li Xiang stated during a first-quarter conference call that there will be no pure electric SUV launched in the second half of this year, and related products will be launched in the first half of next year.

It is worth noting that in the secondary market, Li Auto has recently faced multiple negative impacts. After the first-quarter report was released, Li Auto's stock in the US fell by 12.78%. In the Hong Kong stock market, Li Auto's stock price has fallen by more than 40% since reaching a high point in February.

On one hand, Li Auto has recently been rumored to have a significant layoff plan. It is reported that the overall optimization ratio exceeds 18%, affecting more than 5600 employees. Among them, the sales service operation department will optimize more than 400 people, the recruitment department will be reduced from over 200 people to 40 to 50 people, and the autonomous driving team will be reduced to less than 1000 people. However, Li Auto has not commented on this officially.

On the other hand, Li Auto is facing a class-action lawsuit in the US. On May 15, Beijing lawyer Hao Junbo's WeChat public account "International Lawyer" published an article stating that Li Auto has recently been sued by investors for securities fraud. Investors accuse Li Auto and some executives of making false statements, violating securities laws, causing losses to investors, and requesting the court to order the defendants to compensate investors for the losses caused by their illegal actions leading to a drop in stock price