Shares of Uxin Plunge, Despite a Dramatic Increase in its Core Business

Shares of Chinese used car platform Uxin Ltd took a 6% tumble at $1.99 per American depository share in intraday trading on Monday, despite a 69% increase in revenues from cross-regional used car transactions.
Belinda ZhouJun 11,2019,06:55

Uxin Ltd. (Nasdaq: UXIN) took a 6-percent tumble at $1.99 per American depository share intraday Monday, although revenues from cross-regional used car transaction increased 48 times.

The Beijing-based used car sales platform said its quarterly net revenue reached $149.1 million, representing a year-over-year increase of 55 percent from that of 2018.

At the same time, the company narrowed its net loss to $42.3 million in the first quarter by 65 percent, compared to a net loss of about $121.6 million in the same period last year.

Zhen Zeng, the chief financial officer of Uxin, said it significantly cut adjusted net loss as a percentage of total revenues to 23 percent from 74 percent in the corresponding period of 2018.

Under the company’s business model, there are two business lines of Uxin. The Used Car (business-to-consumer) segment provides information regarding recommendations, financing, documents, delivery, and warranty, among other things. And the Used Car business can be divided into cross-regional and intra-regional transaction. The Auction (business-to-business) platform helps companies acquire and deliver vehicles.

Uxin’s retail transaction continued to gain momentum when cross-regional business drove the overall growth, which offset the recession of its to-business transaction.

Uxin said its transaction volume for the Used Car segment increased to 78,000 units in the first quarter of 2019, representing year-over-year growth of 40 percent.

According to the statement, Uxin shifted its resources to the cross-regional business, which enjoyed a growth rate of 48 times in the first three months through March, totaling $42 million. And the intra-regional transaction section remained stagnant of 3 percent increase to 58,000 units in the period.

The other business line of the Auction business with a decline of 43 percent, offset the growth of the Used Car segment. Uxin explained that the company changed the strategy and dealers turned to retail transactions through Uxin’s Used Car platform.

“In addition to targeting this significant growth potential, our strategic focus on cross-regional transactions will enable us to generate greater revenue and take us one step closer to profitability,” Kun Dai, the chief executive officer of Uxin, said.

Looking ahead, the company said it expects its total revenues to be in the range of 900 million yuan to 950 million yuan, or approximately $130.2 million to $137.5 million, for the second quarter.

“We will take more prudent measures to control costs and manage expenses, maximize the impact of every dollar we spend and continue to optimize operational efficiency,” Zeng said.

The company filed for a $500 million initial public offering in New York last year, and short-seller allegations tanked its shares in April. The stock has collapsed 78 percent within one year.