Bitauto Stock Down 2% on Poor Revenue, Widended Losses

China's auto industry continues to suffer, October marking the 16th consecutive month of declining sales. This has affected Bitauto, which provides marketing and subscription services in the sector.

Anthony Russo
    Nov 26, 2019 6:00 PM  PT
Bitauto Stock Down 2% on Poor Revenue, Widended Losses
author: Anthony Russo   

The stock in Bitauto Holdings Ltd. slipped 2% to $15 per American depositary share on Tuesday after the company announced weak revenue and widened losses for the third quarter.

The Beijing-based auto marketing service provider said in a statement today that in the three months through September its revenue reached $355.5 million, down 7% year-over-year. It suffered a net loss of $22.6 million compared with $2.8 million a year ago, according to the report.

Bitauto attributed the declines in the quarter to the reduction in marketing spending by automakers caused by a continuing decrease in new car sales.

"The entire auto industry continued to face severe pressure as new passenger vehicle sales in China has decreased over the past months, making automakers and dealers increasingly cautious in their marketing spending," Andy Xuan Zhang, the chief executive officer of Bitauto, said today in a conference call with analysts.

October marked the 16th consecutive month of declining auto sales in China, the world's largest market for cars, the South China Morning Post reported. Vehicle sales fell 4% year-over-year in the month, the report said.


(Source: Statista)

Most notably, electric vehicles took a big hit in October, as sales plunged 46% to 75,000 units compared to the same month last year. The cut in subsidies by the government has impacted EV sales, as noted by Christopher Robinson, a senior analyst at Lux Research.

As EV sales have accelerated dramatically, the government has been scaling back these generous subsidies, Robinson told CapitalWatch earlier this month. 

He said, "Lux observed sales spike briefly in June as many consumers rushed to purchase vehicles before subsidies ran out, while sales have fallen since then as the subsidies are removed." 

Founded in 2000, Bitauto provides advertising services to automakers and subscription services to car dealers through its website and mobile apps. Its network of independent dealers surpassed 33,000 as October, Zhang said in the conference call.

"Looking forward, we will remain focused on our core business strategies. First, we will help drive higher ROI for our automaker and dealer customers by bringing them more high quality sales leads. Second, we will work towards rolling out our AI-based marketing solution, which provides automakers tailor made and result-driven marketing tools to all mainstream automakers by the end of this year," Zhang told analysts in the call.

In the fourth quarter, Bitauto said it expects to generate revenue in the range of $342.8 million to $356.8 million.