Why Uxin Stock Soared Today

Actions of Uxin (UXIN 56.47%)China’s online used car dealer rose today after the company delivered better-than-expected results in its fiscal first quarter report.

As of 1:27 p.m., the stock was up 42.6% on the news.

Image source: Getty Images.

Uxin provides strong growth

Uxin, which went public in 2018, has struggled for years before more recent challenges with China’s e-commerce sector and weak consumer spending in China.

The company has changed multiples of its business model to gain traction in China’s massive used car market, and its efforts finally seem to be paying off.

Transaction volume rose 72% from the year-ago quarter to 5,605 units, driven by an increase in retail units, which rose 1,687 to 4,090 as the company focuses on the end buyer rather than selling car dealers.

Revenue rose 38.8% to $55.2 million, but the company cut adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) from $6.7 million to $4 .7 million dollars.

CEO Kun Dai called it a strong performance and noted, “Our vehicle turnover efficiency remains healthy, with inventory turnover days around 30. In addition to robust sales growth, customer satisfaction has improved as our Net Promoter Score reached 65 during the quarter, the highest. level in the industry”.

What’s next for Uxin

Uxin’s revenue growth is a promising sign, but investors should also keep an eye on gross margin, as that could be the biggest driver of profitability if the company can pull it off.

As the business moves into the retail channel, the number should expand. The company also expects to achieve EBITDA profitability by the December quarter. If he can pull that off, expect the stock to go higher from here.