Start-up Chinese electric vehicle (EV) maker Li Auto Inc. (NASDAQ: LI) shares have gained from the frenetic boom in the EV market. The Company recently went public at $11.50 per share in July 2020 reaching a peak of $24.48 before selling off to $14.97 to stabilize. While SPACs have been the rage driving investments in the future of EV development lead by Tesla (NASDAQ: TSLA) , Li Auto is manufacturing and delivering operating vehicles in China throughout its 35 retail stores covering 30 cities. Li Auto actually takes a different approach to EVs but focusing on extended-range electric vehicles (EREVs) that don’t rely as heavily on pure battery power. Risk tolerant investors looking for exposure in the EV market and electronification trend can look for entries at opportunistic pullback levels.
NVIDIA Orin SoC Autonomous Driving
On Sept. 22, 2020, Li Auto announced they will be the first OEM to integrate the NVIDIA (NASDAQ: NVDA) Orin system-on-a-chip (SoC) in its 2022 line of premium SUV EREV vehicles in collaboration with NVIDIA’s Chinese partner Huizhou Desay SV Automotive. The next-gen chip can execute 200 trillion operations per second which is a 7X improvement over its current Xavier SoC. Li Auto also plans to provide upgradeable options including L2+ autonomous driving to L4 dual Orin chips with 400 TOPS power. Ultimately the Company plans to enable 2000 TOPS computing power with the integration of a discrete GPU which can make full L5 autonomous driving possible.
Li Auto Versus Nio
Li Auto started manufacturing its first electric vehicle model Li ONE in November 2019. On Oct. 2, 2020, Li Auto reported a 31% quarter-over-quarter (QoQ) increase for Q3 vehicle deliveries to 8,660 units. The July and August deliveries total 5,156 units and September saw 3,504 Li ONE vehicles for a year-to-date (YTD) total vehicles delivered reaching 18,160 by Oct. 2, 2020. This trails competitor Nio (NYSE: NIO) which delivered 12,206 vehicles in its Q3. However, competitor Nio has been in production for much longer than Li Auto. Nio September vehicle deliveries were 4,708 compared to 3,504 for Li Auto. Nio vehicles are compact versus the SUV vehicles manufactured by Li Auto. Li Auto has more upside than Nio in terms of technology, utility and price action.
Li Auto has a number of high profile analyst coverage ratings since the IPO. Bernstein started coverage with an Outperform rating and $21 target. Morgan Stanley initiated covered on Li Auto with an Overweight rating and $20 price target. Bank of America initiated coverage with a $24 price target. Investors should watch shares of Li Auto for opportunistic pullbacks to get exposure on this unique play on both EV and autonomous driving.
LI Opportunistic Pullback Levels Using the rifle charts on the daily time frame provides a near-term view of the landscape for LI stock, especially with the limited trading data since it recently went public in July 2020. The IPO was priced at $11.50 but opened in the $15s before rallying towards $20 and collapsing down to the $14.35 Fibonacci (fib) level. The daily stochastic bounce triggered the market structure low (MSL) above $15.60 as it charged to all-time highs at the $24.48 fib. Shares eventually fell to the $14.97 fib support to stabilize the price volatility and form another daily stochastic mini pup to slow grind up towards the $19.55 fib. The daily stochastic is now overbought nearing the 100-band, which may trigger another blow-off top. Prudent investors need to wait for the daily stochastic to peak and cross back down through the 80-band and catch the oscillations preferably to the 20-band levels. This is where opportunistic pullback levels can materialize at the $17.41 fib, $15.60 daily MSL and the $14.35 double bottom/fib. Nimble traders can attempt to play a reversion bounce off the $18.25 fib. Traders can also watch other EV makers for positive and negative correlation in price action including TSLA and China-based EV makers NIO, Xpeng Inc. (NYSE: XPEV) , and Kandi Technologies (NASDAQ: KNDI)
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An insider trade occurs when a corporate executive (such as a CEO, CFO or COO) that has non-public information about a company buys or sells shares of that company's stock. Company insiders are required by law to regularly report their stock purchases and sales to the SEC.
Tracking a company's insider trades is a metric that can be used to identify the direction that the company's executives believes that the company is headed. If a number of insiders sell shares of their company, they may believe that the company will have weak future earnings and that the share price will decline in the near future.
For example, if Microsoft's CEO, CFO and COO all recently sold shares of Microsoft stock, that would be an indication that there could be unreported news that may negatively effect Microsoft's stock price in the near future.
This slideshow lists the 12 companies that have had the highest levels of insider buying within the last 180 days.
View the "12 Stocks Corporate Insiders are Abandoning".