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Why Yatsen Stock Plummeted This Morning

By Evan Niu, CFA - May 19, 2021 at 12:12PM

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The Chinese beauty products company reports first-quarter earnings.

What happened

Shares of Yatsen Holding Limited (YSG 0.83%) plummeted by as much as 13% this morning after the company reported first-quarter earnings. The results were mixed relative to expectations. As of 12:20 p.m. EDT, the stock had somewhat recovered but was still down 6%.

So what

Revenue in the first quarter was $220.5 million, ahead of the consensus estimate of $214.5 million. That resulted in an adjusted net loss of $35.8 million, or $0.06 per share, which was worse than the $0.04 per share in adjusted net losses analysts were modeling for. The Chinese consumer discretionary company, which makes beauty products, said direct-to-consumer (DTC) customers increased to 9.6 million and average net revenue per DTC customer was 122.9 yuan ($19.10 based on current exchange rates).

Women shopping for beauty products.

Image source: Getty Images.

"The year is off to a good start with robust topline growth and continued execution of our multi-brand strategy," CEO Jinfeng Huang said in a release. "Growth in the quarter was driven by stellar performance of our flagship Perfect Diary brand as well as robust growth from Little Ondine, Abby's Choice and other brands under Yatsen's portfolio."

Now what

Yatsen is still integrating several brands that it recently acquired but plans to build on its momentum by identifying other valuable brands to acquire and add to its portfolio, Huang added.

Guidance for the second quarter calls for revenue of 1.49 billion yuan to 1.54 billion yuan ($231.5 million to $239.3 million based on current exchange rates), representing growth of 50% to 55%.

Evan Niu, CFA has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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