Following a month-long tumble, Tuya Inc. (NYSE: TUYA) plummeted hard this week, losing close to 44.9% during the five-day period. However, the TUYA stock did the unexpected today, bringing in a premarket gain of 27.1%, after another consecutive bearish day. The TUYA tumble has been the center of social media chatter throughout the week. However, the sudden rebound increasingly impacting Chinese stocks is one that comes highly unexpected, taking investors by storm.
Why is TUYA Climbing High with other Chinese Stocks?
The TUYA rebound does not come in isolation and is presumably linked to a broader wave encompassing China-based stocks. This comes after an announcement by China’s State Council to commit to facilitate and ensure a stable stock market. The announcement instilled confidence with regards to Chinese stocks, which ushered a collective rebound, as was observed with TUYA. Chinese market giants such as Ali Baba and Tencent Holdings each soared following the announcement. In addition to facilitation, Chinese government institutions further claimed to help support Chinese stocks listed on international exchanges. The hand of support sends a clear message across markets that the private industry in China has the government’s support. The move also dispels tensions that circulated the market, following the Chinese government’s crackdown on the tech sector. TUYA clearly is riding along a bigger wave engulfing a wide range of Chinese stocks.
What brought on the ‘TUYA Tumble’?
The trigger causing TUYA’s tumble a week ago presumably links to a financial report showcasing poor performance. Having net loss further fall below, the company reported the figure at almost $49M. This was a major red flag, given that the net loss in the prior-year stood at $18M. The market had been quick to respond to the new information, with traders heavily getting their hands off the stock. The worsening net loss indicates the stock’s value-burning propensity, which is an investor’s worst fear. There are doubts about whether or not the recent TUYA growth spurt will sustain given these financial fundamentals. Social media chatter seems to suggest the stock may be a part of a pump and dump.
Conclusion
TUYA stock, after a freefall tumble, is suddenly seeing a reverse swing, and a potential growth spurt. This comes as part of a larger growth wave engulfing Chinese stocks, after the announcement of support by the Chinese government. Questions come up as to the sustainability of the TUYA growth, given concerning financial results.
