Technology stock

Why RLX Tech Stock Is Soaring Today

What happened

Shares of RLX Technology (RLX -2.37% ) are booming in today’s commerce. Shares of the Chinese e-cigarette company were up about 27.9% at 1:30 p.m. ET Tuesday.

After a day of brutal selling yesterday, RLX is enjoying some rebound momentum. Chinese stocks were hit by their worst daily decline since 2008 on Monday, but some companies in the category are bouncing back in today’s trading.

Image source: Getty Images.

So what

Concerns over China’s relationship with Russia and potential moves to offer financial and military support for its invasion of Ukraine raised fears the country could be hit with a fresh wave of sanctions on Monday. Lockdowns and other preventative measures taken in response to a recent surge in the omicron variant of the coronavirus have also raised fears of further supply chain disruptions, and the combination of risk factors has caused a day of turbulent trading.

RLX was trailing a sharp selloff after its fourth quarter earnings release on March 11 with a dramatic deceleration in sales growth, and the stock was hit by another substantial pullback on Monday amid mounting bearish sentiment for the Chinese. . technology stocks. Investors now appear to be buying Tuesday’s trade decline; the vape company’s stock price climbs accordingly.

Now what

RLX Technology’s revenue rose 20.5% in the fourth quarter to $298.84 million, and the company reported non-GAAP (adjusted) earnings per US Depositary Share of $0.06. Full-year revenue rose 123.1% to $1.33 billion, but the sharp deceleration in sales growth in the fourth quarter clouded the market’s outlook for the business.

On the other hand, at least one analyst still sees the potential for an explosive comeback with the vaping stock. Citigroup‘s Lydia Ling posted a note to RLX on March 14 that lowered the company’s one-year price target on the stock from $11.50 per share to $6 per share. Although the analyst has lowered his price target, this estimate still suggests an upside of around 293.5% based on the company’s current stock price.

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