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.

Author: Belinda Zhou   

Shares of Uxin Ltd. (Nasdaq: UXIN) 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.

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

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

Mr Zhen Zeng, Chief Financial Officer of Uxin, said the company significantly cut adjusted net loss as a percentage of total revenues to 23% from 74% in the corresponding period of 2018.

Under the company's current business model, there are two core business lines, "Uxin Used Car" and "The Auction."

The Uxin Used Car (business-to-consumer) segment provides information regarding recommendations, financing, documents, delivery, and vehicle warranties. The used car business can be further divided into cross-regional and intra-regional transactions.

The company's second core business platform The Auction (business-to-business) 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%.

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.

The intra-regional transaction section remained stagnant, with a 3% increase to 58,000 units in the period.

The 43% decline in the Auction business offset the growth of the Used Car segment. Uxin explained that the company changed its 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," said Kun Dai, Chief Executive Officer of Uxin.

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

In order to achieve more sustainable growth, the company said it will increase its focus on its core business and enhance operational efficiency, while taking a more stringent approach to risk control to improve overall asset quality and cashflow.

"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," said Zeng.

Uxin filed for a $500 million initial public offering in New York last year. However, short-seller allegations tanked its shares in April.

Since its debut on the Nasdaq in 2018, the stock has collapsed 78%.