Uxin Stock Boosted by JD Partnership, But More Action Needed to Regain Trust

After the troubles, the Chinese auto marketplace needs a stronger stimulus to attract investors.
Anna VodApr 22,2021,16:24

The stock in Uxin Ltd. (Nasdaq: UXIN) jumped 8% Thursday, to $1.38 per share, after the company announced its partnership with a Chinese e-commerce giant, JD.com (Nasdaq: JD), to boost its auto sales through an online store.

The stock boost does not seem sufficient to drag Uxin out of troubles with the investors. Uxin has been raising capital, selling some of its businesses, and striking partnerships. It also appointed a new chief financial officer earlier this year. New CFO Feng Lin previously served at Lenovo, Microsoft, HSBC Bank, Capital One, and PricewaterhouseCoopers, and held the role of VP of finance at Uxin. The developments, however, did not offset the company’s flailing business results nor return investors’ trust.

Trust easier lost than recovered, the company was red-flagged in early 2019 by investors’ rights litigators and short-sellers. First, several law firms pursued Uxin for allegedly failing to disclose certain information in its IPO documents of 2018. Then, J Capital Research released a report, where it claimed Uxin overstated its auto sales volume by as much as 40%, inflated the prices of cars it sold, counted third-party revenues as its own, and doubled its inventory, among other things. Uxin denied the allegations.

Since, UXIN stock went on a slide, dampened by weak financial results. In its latest financial report, Uxin reported 81% year-over-year decline in revenues to $11.2 million for the three months ended September 30, 2020. Net loss from continued operations, meanwhile, widened to $38.1 million. Currently, Uxin’s 52-week stock high sits at $2.02 and the low is at 72 cents, below the Nasdaq required minimum.

Earlier this month, Uxin said it was in talks to receive funding of $300 million in exchange for senior convertible preferred shares from “two established Asian funds.” The company did not specify the intended use of the expected capital or the date it expects to receive it. The announcement did, however, manage to bump up Uxin’s stock 68% to $1.97 per share at the time.

Under the collaboration announced today, Uxin will launch a self-operated online store for used car transactions through JD’s platform.

Uxin prepares to release its financial results for the three months through December 2020 next week early on Wednesday, April 28.

Topics:Uxin, China Hustle, fraud, Auto