What happened
Shares of RLX Technology (NYSE: RLX) are soaring in today's trading. The China-based e-cigarette company's stock was up roughly 27.9% as of 1:30 p.m. ET Tuesday.
After a day of brutal sell-offs yesterday, RLX is benefiting from some rebound momentum. Chinese stocks got hit with their worst daily pullback since 2008 on Monday, but some companies in the category are bouncing back in today's trading.
Image source: Getty Images.
So what
Concerns that China's relationship with Russia and potential moves to offer financial and military support for its invasion of Ukraine prompted fears that the country could be hit with a new wave of sanctions on Monday. Lockdowns and other preventative measures taken in response to a recent surge of the coronavirus omicron variant also raised fears of new supply chain disruptions, and the combination of risk factors prompted a day of turbulent trading.
RLX was coming on the heels of a brutal sell-off after its fourth-quarter earnings release on March 11 arrived with a dramatic sales-growth deceleration, and the stock was hit with another substantial pullback on Monday amid the rise in bearish sentiment for Chinese tech stocks. Investors now seem to be buying the dip in Tuesday's trading; the vape company's share price is climbing as a result.
Now what
RLX Technology's revenue grew 20.5% in the fourth quarter to reach $298.84 million, and the company posted a non-GAAP (adjusted) profit per American depositary share of $0.06. Full-year revenue rose 123.1% to reach $1.33 billion, but the big sales growth deceleration in Q4 dampened the market's outlook on the business.
On the other hand, at least one analyst still sees explosive return potential with the vaping stock. Citigroup's Lydia Ling published a note on RLX on March 14 that lowered the firm's one-year price target on the stock from $11.50 per share to $6 per share. Though the analyst cut her price target, that estimate still suggests roughly 293.5% upside based on the company's current share price.
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