RLX Technology (RLX) Stock: Why The Price Fell Today

By Amit Chowdhry ● Dec 3, 2021
  • The stock price of RLX Technology Inc (NYSE: RLX) fell by over 8% pre-market today. This is why it happened.

The stock price of RLX Technology Inc (NYSE: RLX) – a leading branded e-vapor company in China – fell by over 8% pre-market today. Investors are responding negatively to the company’s third-quarter results.

These are the Q3 2021 financial highlights:

— Net revenues were RMB1,676.7 million (US$260.2 million), representing a decrease of 34.0% from RMB2,541.4 million in the second quarter of 2021.

— Gross margin was 39.1%, compared to 45.1% in the second quarter of 2021.

— U.S. GAAP net income was RMB976.4 million (US$151.5 million), compared with RMB824.3 million in the second quarter of 2021.

— Non-GAAP net income was RMB452.7 million (US$70.3 million), compared with RMB651.8 million in the second quarter of 2021.

KEY QUOTES:

“In the third quarter, we continued to develop our business through concerted efforts deepening our scientific research abilities, adding to our differentiated product portfolio, and enhancing our sustainability initiatives. We also strengthened our core capabilities by expanding our talent pool, optimizing our retail network, and making digitalization upgrades to our operating infrastructure. Looking ahead, with the formal confirmation of the amendment to the implementation rules of tobacco monopoly law announced last week bringing innovative tobacco products including e-cigarettes under the regulatory framework, together with the draft administrative measures for electronic cigarettes and the draft national electronic cigarette product standards announced earlier this week, we believe the sector will enter a new era of development, an era marked by enhanced product safety and quality, augmented social responsibilities, and improved intellectual property protection. These developments will pave way for long-term sustainable growth in this sector.”

— Ying (Kate) Wang, Co-founder, Chairperson of the Board of Directors and Chief Executive Officer of RLX Technology

“In the past quarter, we placed even more focus on investments in R&D, organizational upgrades and operational efficiency improvements in existing channels, shifting from the efforts on distribution network expansion in previous quarters. As a result, we have a richer product portfolio in the pipeline and healthier inventory levels across our value chain.”

“We believe our quarterly revenue drop was temporary, and the investments we made in products, talents, research, and compliance in the third quarter and beyond will place us in advantageous positions under the new regulatory paradigm. We expect these investments to yield steady and sustainable growth soon.”

— Chao Lu, Chief Financial Officer of RLX Technology

Disclaimer: This content is intended for informational purposes. Before making any investment, you should do your own analysis.