Market News

RLX Technology Unveils $500M Share Buyback Plan; Shares Pop

Shares of RLX Technology, Inc. (RLX) jumped 21.7% on Wednesday after the Chinese branded e-vapor company disclosed that its board of directors has authorized a stock repurchase program of $500 million. The new authorization will continue until December 31, 2023. 

The company is expected to fund the share buyback plan through its existing cash balance. 

Earnings Recap 

On December 3, RLX Technology posted a better-than-expected Q3 profit, driven by strong revenues. Adjusted earnings came in at RMB0.33 ($0.05) per ADS, versus the consensus estimate of RMB0.00. The company reported earnings of RMB0.171 per ADS in the same quarter last year. Net revenues of RMB1,676.7 million ($260.2 million) grew 50% from the year-ago period. 

In the earnings release, the CEO of RLX Technology, Ms. Ying (Kate) Wang, said, “Looking ahead, with the formal confirmation of the amendment to the implementation rules of tobacco monopoly law announced last week bringing innovative tobacco products including e-cigarettes under the regulatory framework, together with the draft administrative measures for electronic cigarettes and the draft national electronic cigarette product standards announced earlier this week, we believe the sector will enter a new era of development, an era marked by enhanced product safety and quality, augmented social responsibilities, and improved intellectual property protection.” 

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Wall Street’s Take 

The stock has picked up a rating from one analyst in the past three months. Recently, Bank of America Securities analyst Louise Li reiterated a Hold rating on the stock and decreased the price target to $4.10 (13.87% downside potential) from $6.30. 

Risk Analysis 

According to the new TipRanks Risk Factors tool, RLX stock is at risk mainly from three factors: Finance and Corporate, Legal and Regulatory, and Production, which contribute 40%, 24%, and 14%, respectively, to the total 86 risks identified for the stock.

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