Uxin Ltd (NASDAQ: UXIN) stock plunged 20.70% on December 27th, 2018 but slightly rose over 2.7% in the pre-market session on December 28th, 2018 (Source: Google finance). The stock continues to fall after Uxin’s third-quarter earnings report wasn’t enough to impress. November presented more of the same problems Uxin has faced since it debuted on the public market in June, as the stock has gotten swept up in concerns on trade tensions with China and news that the Chinese economy and auto market is slowing. Coming into November, the stock was already down more than a third since its IPO at $9, but the sell-off accelerated last month, largely after its third-quarter earnings report. Uxin delivered revenue growth of 59.6% to $125.5 million, with growth in its consumer-focused segment especially strong as loan facilitation revenue, its biggest category, nearly doubled to $68.8 million. However, that strong top-line growth still represented a marked slowdown from 80% growth in the second quarter.
Uxin’s costs also surged in the quarter as the company continued to spend aggressively on sales and marketing to drive top-line growth. As a result, its adjusted net loss in the quarter widened from $56.7 million to $75.2 million, reaching -$0.09 on a per-share basis.
The company projected revenue of $146.9 million to $152.7 million for the fourth quarter, or just 38.6% growth, though that may be a result of a strategic shift in its dealer-focused business that is resulting in slower revenue growth.
In mid-July, the US ramped up its imposition of trade tariffs on goods from China, including automotive parts. Fearing a full trade war, investors walked away from China-focused equity, and in large numbers.
In the first week of December, Uxin shares surged on news of a partnership with Taobao, one of Alibaba’s e-commerce sites. The stock nearly doubled over a three-day span after the announcement as a short squeeze seemed to help drive the momentum. Due to the company’s aggressive growth, uncertainty with the Chinese economy, and the impact of short-sellers, the stock should continue to be volatile in the coming months.
Meanwhile, the company has recently hat Mr. Hainan Tan has tendered his resignation as a director on the board of directors (the “Board”) of Uxin, effective December 21, 2018. Mr. Tan’s resignation was for personal reasons and not due to any disagreement with the Company regarding its business, finance, accounting and/or any other affairs.