The price of Chinese transportation tech company Full Truck Alliance's (YMM 11.93%) equity decelerated very rapidly on the first trading day of the week. After management published its third-quarter results, investors sold out of the company's American Depositary Shares (ADSes) to leave them with a loss of just under 12%. That was a much steeper decline than the S&P 500 index's 0.9% dip.
A brake on the bottom line
Those results, unveiled before market open on Monday, showed that Full Truck Alliance's net revenue was 3.36 billion yuan ($473 million), which was up by almost 11% year-over-year. By contrast, the company's net income not according to generally accepted accounting practices (GAAP) fell by 20% to 988 million yuan ($139 million). On a per-share basis, the latter figure was 0.93 yuan ($0.13) per ADS.
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This performance meant a mixed quarter for Full Truck Alliance. Collectively, analysts tracking the company were modeling a slightly lower net revenue figure of 3.34 billion yuan ($470 million), but a higher non-GAAP (adjusted) net income of 1 yuan ($0.14) per ADS.
Operationally speaking, Full Truck Alliance notched a new record for total users of its platform. The average monthly active shippers totaled 3.35 million, while the number of truckers at the other end of the system increased to 4.48 million.
NYSE: YMM
Key Data Points
Guiding for disappointment
Full Truck Alliance also proffered guidance for its current (fourth) quarter. Net revenue is anticipated to fall between 3.08 billion yuan and 3.18 billion yuan ($434 million to $4.48 million); the fourth quarter 2024 result was 3.17 billion yuan ($446 million).
In its earnings release, the company stated that it has lately concentrated on upgrades and enhancements to its system. It's also driving harder toward an artificial intelligence (AI)-powered future with its July purchase of a majority stake in Giga.AI Technology.
Management appears to be clear about its future goals and the strategies to achieve them. To me, the sharply negative reaction to the quarterly results seems an overreaction that was undeserved. The company still has good potential, I believe.
