Markets

Why Ruhnn Holding Stock Popped Today

What happened

Shares of Ruhnn Holding (NASDAQ: RUHN) were up 19.9% as of 11:15 a.m. EDT Thursday after the Chinese e-commerce business and "key opinion leader facilitator" announced strong fiscal fourth-quarter 2019 results.

More specifically, in its first-ever quarterly update as a publicly traded company, Ruhnn's net revenue climbed 20.7% year over year to 237.3 million yuan (or $35.4 million), while it narrowed its net loss by more than half to 29.4 million yuan ($4.4 million), or 0.09 yuan ($0.01) per share. 

Asian stock market index data.

Image source: Getty Images.

So what

Ruhnn credits its revenue growth largely to services through its platform model, where a higher number of key opinion leaders (KOLs) -- that is, popular online brand ambassadors and content providers -- and brands cooperating in its ad and marketing business helped sales more than quadruple year over year to 50.3 million yuan. Meanwhile, revenue from Ruhnn's full-service model climbed a modest 1.4% to 186.9 million yuan, sales growth from stores opened in the name of top-tier KOLs more than offsetting the company's transition of some online stores from the full-service model to its burgeoning platform model.

"Ruhnn is China's most influential KOL e-commerce company and we have positioned ourselves as an advanced technology and big data platform that partners with emerging brands and KOLs to fully develop together, a cohesive product and identity strategy," stated Ruhnn founder and chairman, Min Feng. "With this positioning, Ruhnn is dedicated to partnering with new and emerging retail brands in China, providing comprehensive services relating to product design, targeting, marketing and supply chains, among many others, to better match our KOLs with brands."

Now what

Ruhnn CFO Zhenbo Chi added that with "tremendous growth potential and [Ruhnn's] strategy on track," the company believes it's well positioned to gain market share as it attracts new KOLs, brands, and online stores to its base. Given the company's impressive progress toward that end this quarter, it's no surprise to see the stock popping today in response.

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Steve Symington has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

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