On Wednesday, leading e-cigarette manufacturer RLX Technology announced that its board of directors had authorized a stock repurchase program, according to which the company can repurchase up to $500 million of shares in the period ending December 31, 2023. Influenced by this news, the share price of RLX Technology saw an increase. At the close of trading, it was reported at $4.76/share, up 21.74%, with a total market value of $6.406 billion.
RLX Technology said that the repurchase scheme proposed by the company may be carried out in the open market from time to time at the current market price, privately negotiating transactions, blocking transactions or in other ways permitted by law according to market conditions and applicable rules and regulations. The board of directors of the company will regularly review the share repurchase program and may authorize adjustments to its terms and size. The company hopes to fund the repurchase from its existing cash balance.
According to public information, Chinese firm RLX Technology was established in 2018 as a consumer electronic cigarette and vaping company. At present, its main business is the development and sales of RLX electronic vaporizers. It was listed on the New York Stock Exchange on January 22, 2021, when its market value exceeded $40 billion.
After the listing, the firm’s share price once rose to the highest price of $35 on the second day of listing, and then started going downward. As of the close of December 8, EST, the share price of RLX Technology has dropped by 86.4% from its highest point.
RLX Technology disclosed its third-quarter financial results on December 3. The announcement shows that the company’s net income decreased from 2.5414 billion yuan ($400.54 billion) in the second quarter of 2021 to 1.6767 billion yuan in the third quarter of 2021, a decrease of 34.0%.
In this regard, RLX Technology explained that the negative publicity of the e-cigarette industry since the second half of the year, the new draft rules on e-cigarettes published in China on March 22, 2021, and the COVID-19 pandemic have all adversely affected the sales and channel inventory management.
In terms of financing, in 2018, RLX Technology completed an angel round of financing totaling 36 million yuan. In the same year, it completed financing of more than $37 million in round A and round A+; In April and May 2019, in its C round of financing, it raised $75 million; In August 2019 and January 2020, the company raised $107.3 million in C+ round of financing; In September 2020, RLX Technology raised $182.4 million in the D-2 round of financing.