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Why EV Stock Li Auto Could Be the One to Own in 2024

After reaching $47 in August, LI Auto (NASDAQ:LI) corrected to $39, offering a potential doubling opportunity next year. Q3 2023 showed revenue of $4.61 billion, a 271.6% YoY surge, with a free cash flow of $1.8 billion. The company’s cash flow strength and anticipated delivery growth suggest a robust outlook and has positive implications for LI stock.

Li Auto’s fully electric Li MEGA, set for a February launch, garnered over 10,000 pre-orders, signaling strong market interest. Anticipated delivery numbers suggest Li Auto will maintain a significant presence in the EV market in 2024.

That said, it’s clear how LI is a promising EV stock to hold on to this 2024. 

Excellent Delivery Reports

Li Auto, the Chinese luxury EV manufacturer, achieved a robust performance in November, delivering a record 41,030 units, marking a 2.7x increase compared to the previous year. Demand for its premium SUVs, Li L9, Li L7, and Li L8, remained strong, combining gasoline generators with batteries for extended range. 

Cumulative deliveries in 2023 reached 325,677, a remarkable 191% YoY increase. XPeng and Nio also reported strong sales in November, contributing to the positive trend in the Chinese EV market.

Li Auto’s Chairman and CEO, Xiang Li, announced substantial advancements in autonomous driving R&D, unveiling plans to expedite AD Max 3.0 rollout with an OTA version 5.0 upgrade in December. The upgraded AD Max 3.0 boasts full-scenario autonomous driving, assisted driving functions, leading AEB active safety system, and an automated parking system.

Additionally, the enhanced smart in-car voice assistant, Li Xiang Tong Xue, will serve as a comprehensive guide for passengers, while a new AC Eco mode, leveraging a self-developed thermal management system, enhances winter driving range by 15% to 20%.

New Options for 2024

On November 30, new options for Li Auto Inc. with a January 2024 expiration date became available. Notably, a put contract at the $36.00 strike price, with a bid of $1.83, offered an alternative for investors interested in purchasing LI shares. 

Selling this put contract committed investors to buy the stock at $36.00 but allowed them to collect a premium, effectively lowering the cost basis to $34.17 (before commissions). This presented an appealing option compared to the current share price of $36.78.

Given the $36.00 strike’s approximately 2% discount to the stock’s current trading price, there was a possibility that the put contract could expire worthless, indicating it was out of the money by that percentage. Analytical data, including Greeks, implied that the odds of this outcome were 99%. 

Looking for a Profitable 2024? Buy LI Stock

As the year nears its end, concerns about high inflation, interest rates, recession fears, and low consumer spending have lingered, but signs suggest the worst is behind us. 

Amidst a backdrop of electric vehicle (EV) manufacturers revising down production targets and providing cautious guidance for the last quarter, Li Auto is a standout performer. Defying challenges like high inflation and a slump in EV demand, the automaker has consistently excelled.

For forward-looking investors seeking stocks before the new year, Li Auto stands out, concluding the year with strong momentum. Expectations are high for these three companies to maintain their upward trajectory into 2024.

On the date of publication, Chris MacDonald did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the Publishing Guidelines.

Chris MacDonald’s love for investing led him to pursue an MBA in Finance and take on a number of management roles in corporate finance and venture capital over the past 15 years. His experience as a financial analyst in the past, coupled with his fervor for finding undervalued growth opportunities, contribute to his conservative, long-term investing perspective.