Shares of Yunji Inc. (YJ) stock were down today. Why did it happen?

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Yunji Inc. (YJ), an eCommerce platform in China, today reported its fourth quarter and fiscal year 2020 unaudited results after which the YJ stock price fell by 9.13% to drop at $2.39 a share as of this writing. YJ stock seemed red at the previous closing with a 3.31% drop and $2.63 per share price. Let’s analyze the earnings to understand the drop.

Fourth-quarter Results

  • Yunji Inc generated RMB1,327.4 million revenue in the fourth quarter of 2020 which shows a significant decrease as compared to RMB2,449.4 million in the fourth quarter of 2019.
  • Merchandise sales revenue was RMB1,165.2 representing a 45.2% decrease as compared to the same period in 2019.
  • The membership program recorded RMB0.04 million as compared to RMB145.9 million in the same period of 2019.This decrease was mainly due to Yunji’s ongoing refinement of its membership enrollment system.
  • Marketplace business revenue was RMB151.7 million representing a decrease of 10.3%
  • The total cost of revenues of YJ stock wasRMB986.6 million representing a 46.8% decrease as compared to RMB1,854.9 million in the same tenure of the previous year while operating expenses were RMB367.9 million with a 44.5% decrease as compared to the fourth quarter of 2019.

The financial year 2020 Results

  • Full 2020-year revenue of the YJ stock dropped to RMB5,530.3 million as compared to RMB11,672.0 million in 2019.
  • Merchandise sales revenue was RMB4,829.4 million representing a 54.2%decrease over the year.
  • Membership program generated RMB42.4 million revenue while it was RMB776.8 million in 2019, thus representinga 94.5% decrease over the year.
  • marketplace business revenue surged by 92.3% to RMB599.9 million in 2020 as compared to RMB311.9 million in 2019.
  • The total cost of revenues of YJ stock was RMB3,940.0 million with a 57.4% drop over the year while operating expenses dropped toRMB1,720.9 million as compared to RMB2,746.0 million in 2019.
  • Yunji stock suffered RMB97.5 million loss from its operations while this loss was RMB254.8 million in 2019.
  • RMB151.7 million of net loss was recorded in 2020 as compared to RMB123.8 million in 2019.

Past Developments

On January 29, 2021,YJ stock launched its first private label food brand, Li Ba Tian, in response to the increasing demand for children’s food in China.Furthermore, in the lunar year period, Yunji launched many campaigns for the growth of its e-commerce business.

Conclusion:

Yunji stock is facing bearish sentiment as far as the stock market is concerned. Yunji revenues showed a significant decrease in 2020 as compared to prior year revenue. Hence it is better to analyze Yunji’s balance sheet, its fundamentals, and future growth deeply before making any decision about it.

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