Shares of online discount retailer Vipshop Holdings (VIPS -2.96%) plummeted on Tuesday, falling as much as 21.8%. At 2:23 p.m. EDT, shares were down 19.6%.
The stock's decline follows Vipshop's first-quarter earnings release. Though revenue during the period increased 24.6% year over year, Vipshop's net income declined and its second-quarter revenue guidance was below the consensus analyst estimate for the period.
For its first quarter, Vipshop reported revenue of 19.9 billion RMB, or $3.2 billion as of May 15, 2018. Up about 25% year over year, the revenue was at the high end of management's guidance range for the period. This was driven primarily by a 25% year-over-year increase in Vipshop's average revenue per customer.
Non-GAAP net income, however, fell from 799.4 million RMB in the year-ago quarter to 727.7 million RMB. Part of Vipshop's lower net income was due to the company's investment in promotional activities to help drive growth.
Vipshop guided for second-quarter revenue to be between 20.5 billion RMB to 21.3 billion RMB. The low-end of this guidance range converts to about $3.2 billion as of May 15, 2018. On average, analysts were expecting second-quarter revenue of about $3.08 billion.
But management is confident about its long-term revenue growth, noting that its recent strategic collaboration with Tencent and JD.com should be a catalyst.
"Looking ahead, we will continue to work closely with Tencent and JD.com in order to improve the traffic flow and conversion rates, which will contribute meaningfully to our long-term customer and revenue growth," said Vipshop CEO Eric Shen in the company's first-quarter earnings release.