Li Auto Inc. (NASDAQ: LI) stock plunged 9.18% on August 30^th, 2020 and continued its bearish momentum on 31^st August, 2020 (As of 11:03 am GMT-4 ; Source: Google finance) post a huge rally after Goldman Sachs analyst Fei Fang had given a “conviction buy,” initiated coverage with a buy rating and gave a price target of $20.60. As per the analyst, Fang told auto investors that Li is differentiating itself from its Chinese rivals with “compelling” consumer experiences. Its Li One SUV, got introduced in November 2019, which was considered the first step in a larger innovation plan that could boost its shares substantially higher over time. Fang has high expectations for Li Auto’s growth as he anticipates its sales to rise sharply, from about 30,000 vehicles this year to 445,000 vehicles in 2025. Previously, Morgan Stanley analyst Tim Hsaio had also initiated coverage with an overweight rating and a $20 price target.  As per the analyst Hsaio LI had hit “the sweet spot” of China’s vehicle market (upscale SUVs) and that its extended-range platform, that comprises of an on-board gasoline-fueled generator to recharge the battery, similar to General Motors’ original Chevrolet Volt, which will help it differentiate itself, particularly in parts of China where high-speed electric-vehicle chargers aren’t yet common.

Moreover, Li’s SUV has a gasoline-powered generator that recharges batteries on the fly that serves as a range extender for the vehicle. An onboard generator is an advantage for Li because China’s EV charging infrastructure isn’t well developed. Currently, Li has a little smaller in delivery volume than NIO (NIO), another Chinese EV maker. NIO stock, for comparison, is of worth about $17 billion. The company also has a little more debt than Li. Fang also covers NIO stock. He has given “Sell” rating with a $7.70 price target, implying NIO should be worth about 60% of what Li is worth. The difference in valuation is one way that shows how high analyst Fang is on Li’s business strategy. Further, Zhu covers NIO stock, too, and rates shares the equivalent of Hold. He has given the price target of $12 a share on the stock.

Going forward, the investors should anticipates more Li research reports in coming weeks. The company has only two analysts from large brokerages covering it, compared with NIO’s 14. Analysts are often prohibited from publishing research immediately after an IPO. Goldman bankers, for their part, helped Li raised money in its stock offering.