The ideal is far from ideal right now
Live for a long time, ideal investors (shareholders) and executives are in-house, and go to court. What's going on?
Finance Associated Press, May 16 -- Li Auto originally had high hopes for the first pure electric MPV model, MEGA, and set an aggressive sales target for it, but the model did not perform as expected after its launch on March 1. Li Auto adjusted its sales targets for the first quarter and full year on March 21. Between February 29 and March 21, Li Auto's share price fell by 30%. On May 15, Hao Junbo, a lawyer in Beijing, said that investors had filed a lawsuit in a U.S. court against Li Auto and some executives for securities fraud. He posted a public solicitation for investors to participate in a free class action lawsuit. The litigation period of the case is from February 26 to March 20, 2024. On February 26, Li Auto released its 2023 annual results and gave guidance for deliveries in the first quarter of 2024. On March 21, Li Auto lowered its delivery target for the first quarter.
It should be pointed out that Li Auto is listed on the NASDAQ and Hong Kong in the United States, and the American investors who initiated the class action lawsuit this time. In the Hong Kong market, there was no disclosure about the U.S. investor class action.
It should be noted that if the US investor wins the lawsuit, it remains to be seen whether the investment in Hong Kong will follow the gourd.
Woe to MEGA
From public information, it is known that the lawsuit initiated by American investors against Li Auto and executives is mainly due to the loss of MEGA.
As a mid-to-high-end MPV, the MEGA has high hopes for Li Auto. MEGA, which was built in the direction of explosive models, occupied and consumed a large amount of manpower and material resources before it was launched. However, after the listing, because of the "fatal injury" of the appearance, it disappeared from the automobile market almost instantly and lost its popularity.
In view of the loss of MEGA, Li Auto had to adjust its annual sales target. As a result, the ideal stock price fluctuates. That's why U.S. investors have a reason to file a class action lawsuit against Li Auto and accuse executives of fraud.
As for whether Li Auto's decision-making was appropriate in the process of developing MEGA, and whether the various behaviors of senior executives constituted fraud, there are different opinions.
Is Li Auto unjust, is it unwarranted or deserved?
The class action lawsuit is at issue as to who should pay for MEGA's losses and the losses caused by the stock price fluctuations caused by the adjustment of the annual business plan.
Objectively speaking, a normal business entity will inevitably face various competitions and risks when developing an output, so the new products it develops will certainly not guarantee success; It is also common for listed companies to revise their annual business objectives according to the actual situation, which is a normal business practice. It seems overbearing to file a lawsuit against executives solely on the grounds of product development failures or revisions to annual business targets.
From this point of view, the executives led by Li Auto and Li Xiang seem to be very wronged.
This involves a problem, that is, whether the decision of Li Auto to develop products is reasonable, for details, please refer to the article "After the MEGA Failure, Li Auto panicked, and the hidden product problem is more deadly"
Wang Xing, one of the investors of Li Auto, once publicly said: "In other words, MEGA is a bit like a car made for the ideal CEO himself, and L6 is the car made by Li employees for themselves." It can be seen that investors are dissatisfied with MEGA's failure and believe that executives need to be held responsible.
The U.S. is no better than China, and U.S. investors are harder to fool than Chinese retail investors
In the A-share market, there are often cases of business owners hollowing out listed companies. The big ones are Kangmei Pharmaceutical's fraud of 30 billion, ST Hongtu's fraud of 48 billion in 5 years, and Jin Tongling's financial fraud for 6 consecutive years. There have even been cases of gang crimes, sponsors (institutions), accounting firms, etc., jointly committing fraud, and guarding and stealing.
In the A-share market, some companies pay dividends before listing, intending to make up for holes after listing to make money, such as the recent Marco Polo tiles; Some of them are full of fraud, and the actual controller fled to Singapore, and publicly shouted: You come to arrest me.
After all, the investment soil in China and the United States is different, and the Chinese business owners who fool retail investors are likely to suffer in the US capital market.
The class action lawsuit filed by US investors against Li Auto and its executives is a wake-up call for Chinese business owners: overseas capital markets are not ATMs, and foreign investors are no better fooled than domestic retail investors.
Business owners can't turn their hands into clouds or face lawsuits. For example, whether the decision of Li Auto's new product is reasonable, whether it is a word, whether it is too arbitrary to revise the annual business target, whether the basis is reasonable, and so on.
As for the case of Li Auto, let's wait and see who is the justice in your mind, and who ultimately represents justice.