Why Uxin jumped 25% today


What happened

Chinese online used car dealership Uxin (NASDAQ: UXIN) jumped 25%, rebounding from its all-time low from the previous session. The company, once valued at more than $2.5 billion, still trades at a market cap of less than $300 million after the jump.

Image source: Getty Images.

So what

Shares of Uxin are down nearly 60% since the start of 2020 and nearly 90% since its IPO in 2018. After hitting a low of $0.78 at Monday’s close, shares have rallied to close Tuesday at $0.98 per share.

Uxin today announced that it will announce quarterly results for its fiscal 2021 first quarter ending June 30, 2020 next week. The company recently changed its fiscal year end date from December 31 to March 31 after a change in business model last year. Uxin sold its loan facilitation activity, which has dampened earnings from what investors once identified as a growth business.

Now what

Uxin said that while he believes auto finance helps facilitate the desire to buy a used car, the loan collateral required as an enabler puts pressure on cash flow. The company says that with these responsibilities behind it, “we have evolved from a finance-focused platform to a transaction-focused online used car dealership.”

In 2020, the company removed all historical loan guarantee obligations. With the transition period over and the stock bouncing off its all-time low, investors could look to next week’s earnings for good news with the once-promising online platform’s new business model.

This article represents the opinion of the author, who may disagree with the “official” recommendation position of a high-end consulting service Motley Fool. We are heterogeneous! Challenging an investing thesis — even one of our own — helps us all think critically about investing and make decisions that help us become smarter, happier, and wealthier.

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