Li Auto: Deep-Value Buy Supported By Robust Backlog And Expanding Capacity
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Juxtaposed Ideas14.97K FollowersFollow5ShareSavePlay(13min)CommentsSummaryLI remains a Great Deep-Value Buy here, thanks to the overly discounted valuations, the oversold technical indicators, and the established 5Y trading floor at $17s.The automaker's near-term recovery is likely to be lumpy, attributed to the supply chain bottlenecks, the higher Li Mega-related recall costs, and the policy-driven demand headwinds.Despite the potentially impacted bottom lines, LI may report excellent top-line growth at a CAGR of +10.4% through FY2027, thanks to the robust i6 backlog and the expanded capacity in FY2026.The current FWD EV/Sales of 0.39x versus the sector median of 1.34x highlights the automaker's rich capital appreciation potential upon re-rating.LI's rich balance sheet at a net cash position of $12.53B underpins its resilience and ability to weather the near-term headwinds as well. Jacob Wackerhausen/iStock via Getty Images I previously covered Li Auto (LI) in October 2025, discussing how the underwhelming FQ3'25 guidance and the declining August 2025 deliveries had triggered the stock's recent underperformance compared to its pure-play EV peers. DespiteThis article was written byJuxtaposed Ideas14.97K FollowersFollowI am a full-time analyst interested in a wide range of stocks. With my unique insights and knowledge, I hope to provide other investors with a contrasting view of my portfolio, given my particular background.If you have any questions, feel free to reach out to me via a direct message on Seeking Alpha or leave a comment on one of my articles.Analyst’s Disclosure:I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article. The analysis is provided exclusively for informational purposes and should not be considered professional investment advice. Before investing, please conduct personal in-depth research and utmost due diligence, as there are many risks associated with the trade, including capital loss.Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.Quick InsightsHow do current LI valuations compare to peers and historical norms?LI trades at 0.39x FWD EV/Sales, well below its 5Y mean (3.08x) and sector median (1.34x), signaling its deep value thesis relative to BYDDF, NIO, XPEV, and Xiaomi.What are the key risks to LI's near-term delivery and margin outlook?Supply chain bottlenecks, recall-related costs, reduced government incentives, and impacted hybrid demand may create near-term headwinds, likely resulting in LI's mixed metrics into FY2026.What forward catalysts could drive a reversal in LI's stock performance?Normalization of delivery trends upon the ramped up Li i6 production and the improved market sentiments may unlock an outsized capital appreciation from current oversold levels.Recommended For You