Shares of Uxin Ltd (NASDAQ:UXIN) were revving higher today in anticipation of the Chinese used-car platform's first earnings report as a publicly traded company tomorrow morning. Shares finished today's session 20% higher, a sign the stock is set for a big movement tomorrow, depending on the results.
Uxin has had a rough go of it in its first few weeks on the public markets. Its IPO priced below the range it had hoped for, with its American depositary shares selling for $9 on June 27. Since then, the stock has sold off along with many other Chinese stocks, as fears of a trade war have mounted. Prior to today's gains, shares had lost nearly 50% since their debut.
However, that sell-off may present a buying opportunity, as Uxin has a powerful position in a fast-growing market. It's the leading online seller of used cars in China, with 41%-42% market share in both sales to other customers and sales to dealers. Revenue is skyrocketing, up 137% since last year, to $298.6 million, but the company also is operating at a wide loss with a net loss of $420.5 million, or $259.6 million adjusted for share-based compensation and derivatives.
Analysts are expecting revenue of $92.5 million and a per-ADS loss of $0.21 when the company reports tomorrow. Though Uxin is expected to lose money through next year, that seems to be by design, as last year it spent more on sales and marketing than what it brought in as revenue. This is a sign that it's spending to pursue growth and could be profitable -- or at least closer to it -- if it cut its marketing budget.
Like other Chinese stocks, Uxin looks like a high-risk, high-reward play. We'll learn more when the company reports second-quarter earnings tomorrow.