Uxin Shares Plunge as Revenue Surge Fails to Yield Profit

Shares of Uxin Ltd. plunged in New York after the Chinese operator of an online sales platform for used cars failed to turn a profit on surging revenue as investors remained bearish on its prospects for tapping consumer demand for used cars in the world’s largest auto market.

Uxin is shifting from enabling sales between businesses to focusing more on consumers. The stock lost 17.5% Thursday after the report of it latest results, and Uxin’s American Depositary Shares (ADSs) now trade at less than half the price of their New York IPO last June.

Revenue rose 61.6% in the fourth quarter to 1.14 billion yuan ($170 million), while the net loss narrowed by about two-thirds to 314.6 million yuan, according to Uxin’s latest quarterly report. 

The company began its drive toward more consumer-focused services in 2017 and has been making that part of the business its main focus. Revenue from consumer deals grew 263% to 937 million yuan in the fourth quarter and now accounts for more than 80% of total revenue as the company downplays its older business focusing on big customers like fleet operators. Uxin plans to place strong emphasis on moving into smaller cities where lower incomes could make used cars more attractive, the company said.

“Looking into 2019, we will continue to increase our focus on the (consumer) business,” said founder and CEO Dai Kun. “We have identified a number of strategic initiatives to strengthen our capabilities on this front. For example, we will adopt a franchise model to complement our self-operated service centers in order to better penetrate lower-tier cities and expand coverage of our offline network.”

As part of its emphasis on consumers, Uxin formed a strategic tie-up last December with Taobao, the wildly popular business-to-consumer (B2C) e-commerce platform operated by industry giant Alibaba. Dai said that tie-up brought Uxin around 3,000 transactions in December, observing that the partnership was still in its early stages. 

Contact reporter Yang Ge (geyang@caixin.com)