What happened
Shares of Uxin (UXIN -2.57%), a Chinese online used car company, were taking a dive after the company reported third-quarter earnings this morning.
As of 1:59 p.m. ET, the stock was down 17.1%.
Image source: Getty Images.
So what
Despite the sell-off, Uxin's numbers showed solid growth. After reinventing its business model several times, the company looks to be on a steady growth trajectory with transaction volume up 33% to 4,865 units and revenue increasing 47% to $49.5 million. Analyst estimates were not available.
Uxin is still losing money, and its gross margin was just 4.1% compared to 2.9% a year ago, an improvement but showing the company's business model still needs to gain scale. The company has ditched its marketplace model and now buys and sells used cars directly, making it closer to an online dealer like Carvana.
On the bottom line, its adjusted loss narrowed from $26.8 million to $12.6 million, or $0.01 per share.
CEO Kun Dai said: "In the third quarter of our fiscal year 2022, we once again delivered robust business performance highlighted by the strong sequential growth of our retail transaction volume. Notably, our second IRC (Inspection and Reconditioning Center) in Hefei generated rapid growth since its opening in mid-November 2021."
Now what
Uxin dropped its high-volume dealer-focused 2B segment in 2020, and has since focused on building up its consumer business as a direct online seller of used cars. However, investors are still skeptical of the business as the stock has crumbled in recent years. With less than 5,000 units sold in a quarter, Uxin is still a tiny player in the used car market and is far from achieving the scale necessary to turn a profit, especially in a market where around 14 million used cars are sold annually.
Add to that investor concerns about the regulatory environment and potential delistings for Chinese tech stocks and it's not surprising the stock is down today.
