Will This Stock Continue to Ruhnn Hot?

Ruhnn Holding, backed by Alibaba, is betting on e-commerce livestreaming.

Author: Belinda Zhou   

Stock in Ruhnn Holding Ltd. (Nasdaq: RUHN) jumped 9% Wednesday morning on narrowed loss in the fourth quarter and strong revenue guidance following a 21% gain on Tuesday's share repurchase program.

The e-commerce services platform, which connects brands with key opinion leaders (KOL), said in a statement that in the three months through March its revenue reached $32.2 million, down 4% year-over-year. Net loss in the fourth quarter hit $3.7 million, or 1 cent per share, down 6% from the previous year. 

Lei Sun, the chief executive officer of Ruhnn, said the fourth quarter was a "historically slower seasonal quarter" for the company due to the impact of Covid-19 pandemic.

The Hangzhou-based company said in the fiscal year 2020, its total net revenue increased to $183 million, up 19% year-over-year. Ruhnn saw its revenues from services through the platform model nearly doubled in 2020, amounting to $42.8 million, and the company attributed the growth to the increase of KOLs and brands.

The company reported that the number of signed KOLs increased to 168 in March from 128 a year ago, while the company also added 15 popular KOLs from 22 to 37 in the last 12 months. 

"In addition to the rapid growth in total net revenue, particularly through services revenue, which achieved over 100% year-over-year growth in the fiscal year 2020," Sun added.

Ruhnn divides KOLs into three levels: Top-tier KOLs, Established KOLs, and Emerging KOLs, among which eight top-tier KOLs generated over 10 million yuan ($1.43 million) service revenue each in the past one year.

"E-commerce live-streaming has also emerged as an important monetization channel under the platform model," Sun said in the statement. Ruhnn's chairman Min Feng also said the e-commerce livestreaming business has also become one of its new initiatives in March.

The company announced a share repurchase program of up to $15 million on Tuesday, sending its stock price up 21%.

Ruhnn plans to fund the buybacks from its existing cash balance under the plan. As of December, Ruhnn reported it had cash and cash equivalents, restricted cash, and short-term investments of $122.6 million. 

"The share repurchase program reflects our commitment to increasing shareholder value and our confidence in the Company's business fundamentals and long-term prospects," Sun said on Tuesday.

For the net revenue from services through the platform model in 2021, the fashion and lifestyle products retailer is eying year-over-year growth between 72% and 101%, or between 520 million yuan and 610.0 million yuan ($74.3 million and $87.1 million). For its total revenue in 2021, the company set the growth rate of between 2% and 16%, or $189 million and $214 million, respectively. 

Shares in Ruhnn traded at $3.89 per share, up 7% as of midday Wednesday.

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