Why RLX Technology Inc. (RLX) Crashed On Monday

We recently published a list of 10 Stocks Defy Monday’s Market Optimism. In this article, we are going to take a look at where RLX Technology Inc. (NYSE:RLX) stands against other stocks that defy Monday’s market optimism.

US shares kicked off Monday’s trading with a bounceback from last week’s pessimistic sentiment, as economies took a pause from their tariff war.

Additionally, investors breathed a sigh of relief on the February retail sales report which came in not as bad as feared.

According to the latest figures, retail sales rose 0.2 percent, albeit below the 0.6 percent as expected by analysts. Excluding autos, sales are up by 0.3 percent, in line with economists’ expectations.

Following the news, the Dow Jones clocked in a 0.85-percent gain, followed by the S&P 500 with 0.64 percent, and the tech-heavy Nasdaq with 0.31 percent.

Meanwhile, 10 companies bucked a wider optimistic sentiment over a flurry of negative corporate news that weighed down on their shares. In this article, we have listed Monday’s 10 worst performers and detailed the reasons behind their drop.

To come up with the list, we considered only the stocks with $2 billion market capitalization and $5 million in trading volume.

A worker in a factory environment assembling a e-vapor product.

RLX Technology Inc. (NYSE:RLX)

RLX Technology fell for a second day on Monday, losing 13.27 percent to close at $1.96 each as investor sentiment was dampened by a downgraded rating and outlook for the company.

On Monday, Citi said it downgraded RLX to “neutral” from “buy” previously, while also lowering its price target to $2.5 from $2.8 previously following the company’s fourth-quarter earnings performance.

In the fourth quarter of the year, RLX said net income attributable to the company fell by 42.8 percent to RMB121.96 million from RMB213.5 million in the same period a year earlier, while revenues rose by 56 percent to RMB813.4 million from RMB520.5 million year-on-year.

For the full-year period, RLX said net income attributable to the company was up by 3.18 percent to RMB551.8 million from RMB534 million in 2023, while revenues increased by 73 percent to RMB2.748 billion from RMB1.586 billion year-on-year.

Overall, RLX ranks 1st on our list of stocks that defy Monday’s market optimism. While we acknowledge the potential of RLX as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns and doing so within a shorter time frame. If you are looking for an AI stock that is as promising as RLX but trades at less than 5 times its earnings, check out our report about the cheapest AI stock.

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Disclosure: None. This article is originally published at Insider Monkey.