RLX Technology’s shares rose in Monday pre-market trading despite reporting third-quarter results that showed big declines in revenue and earnings.
The Chinese e-vapor company attributed the weaker results to the discontinuation of its older products and the competition of illegal products in the market, which resurged after special action by the regulator ended in April 2023.
"The end of the third quarter of 2023 marked one year since the new regulatory framework for the e-vapor industry came into effect," RLX co-founder, chairperson and CEO Ying (Kate) Wang commented in a statement.
"As a legitimate industry participant, we have remained dedicated to developing our product portfolio to provide adult smokers with compliant, superior-quality products. While we have made some progress with our recovery, we are still facing external challenges, especially the impact of illegal products.”
Revenue for the quarter ended September 30, 2023, fell 59% decline to US$58.7 million.
Adjusted and diluted net income per share came in 41% down at US$0.02.
To address its near-term obstacles, RLX said it plans to focus on its core strategy: providing a wide variety of quality, compliant products across an extensive range of price points to meet users' various needs.
“Meanwhile, we are making efforts to enhance users' understanding of the new regulations and collaborating with regulators to combat illegal products and create a healthy and orderly market,” Wang added.
“As a trusted e-vapor brand for adult smokers, we believe that more users will gradually switch to our products as increased awareness of the new regulations and the dangers of substandard, illegal products rises."
Ahead of the opening bell, the company’s shares were up 13.4% at $1.64.
Contact the author at stephen.gunnion@proactiveinvestors.com