Shares of Uxin (UXIN -2.20%) were moving backward today as the Chinese online used-car dealer posted disappointing results in its second-quarter earnings report. In its brief history as a publicly traded company, Uxin has shifted its business model several times, and this round of results was the latest evidence that those efforts still haven't paid off.
Uxin stock was down 16.1% as of 10:16 a.m. EST on Thursday.
Earlier this year, Uxin replaced its offline sales team with an online one, a strategy it believes will be more profitable in the long run. But that, along with coronavirus-related challenges, has led to a sharp drop in revenue at the company as the online team is much smaller. Though Uxin's online used car transactions rose more than 50% from 1,702 units in the quarter a year ago to 2,653, that was down sharply from a total of 23,566, including offline sales, a year ago.
As a result, overall revenue fell 81% to $11.2 million, showing Uxin is losing the vast majority of its business for now. The company has also begun shifting to an "inventory owning" model, essentially moving away from a marketplace for third-party sellers. This type of model is more costly up front, but can be more profitable over the long run if done well.
On the bottom line, Uxin reported a loss of $0.04 per share, even with the results a year ago.
CEO Kun Dai said: "We started to shift to an 'inventory owning' model in September 2020, and we are happy to report that we have successfully made the transition. The completion of our business model upgrade gives us better control over order flow and supply chain management."
Uxin has been public for only two and a half years, but the business has undergone several transitions as the company has sold off a number of its components, including the loan facilitation segment. At one point, the company touted its focus on cross-regional transactions, and it's now committed to owning inventory and using an exclusively online sales team. Thus far, none of those moves have paid off, and the Chinese stock is trading at just a fraction of its IPO price of $9. At this point, it's hard to have confidence in the company until there are material changes in its performance.