Mogu Stock Tanks 19% on Declined Revenue; Down 79% Since IPO
China's fashion and lifestyle platform Mogu Inc. (NYSE: MOGU) slid into the red in early trading Monday after reporting a revenue drop for the second quarter.
In a statement today, Mogu said its revenue in the three months through June reached $36.3 million, representing a year-over-year decrease of 3 percent. Its net loss has narrowed to $17.6 million, or 16 cents per American depositary share, down 61 percent from one year ago, according to the report.
In response to the news, shares in Mogu dropped to $2.95 by midday Monday, down 19 percent.
"We continued to make significant and exciting progress towards fulfilling our goal of becoming a key opinion leader-driven innovative fashion and lifestyle destination with an upgraded fashion supply chain," Qi Chen, the chief executive officer of Mogu, said in the statement.
The company said its gross merchandise value in the second quarter reached 4.17 billion yuan ($600 million) up 3 percent from the corresponding period in 2018. MOGU said its live video broadcast got momentum to thrive with a triple-digit growth rate of 103 percent, which contributed 32 percent to its total GMV during the three months through June.
"In China, live video broadcast is quickly becoming one of the most popular and effective content formats to drive user engagement and sales conversion, especially in the fashion sector," Chen said.
Benefiting from the live video broadcast-driven business model, Mogu set its goal of growing LVB-associated GMV to account for a majority of total GMV within the next 12 months, according to Chen.
"Going forward, we expect commission revenues to continue driving total revenues and our LVB business grows to account for a more significant portion of our business," Helen Wu, the chief financial officer of Mogu, said. The company has not issued guidance for the third quarter.
Mogu, backed by Tencent Holdings Ltd. (HKEX: 0700), lost about 79 percent of its market value after its debut in New York in December. Mogu sold 4.75 million ADSs at $14 apiece, raising $66.5 million in its float.
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