We share weekly commentaries with investors on stocks in our strategies that have appreciated or dropped more than 15% in a day during the course of the week. We hope you find this commentary useful.
Niu Technologies (NIU)
Shares of Niu Technologies NIU), a provider of smart urban mobility solutions, were down 16% on Monday after the company reported earnings and revenues that fell short of analyst expectations. The number of electric scooters sold in China increased nearly 60% year-over-year but international sales declined 11.2%. Niu noted that the decline in international sales was related to logistics, not demand.
Shares of Recursion Pharmaceuticals (RXRX), an AI-enabled drug discovery company focused on small molecule therapies for a wide range of disease areas, closed down roughly 16% on Monday and then up 16% on Wednesday for no apparent fundamental reason. In our view, the volatility in genomics stocks has been indiscriminate. While Recursion is a pioneering force in small molecule drug discovery, analysts could be concerned about increased spending as its vast pipeline moves into clinical trials. We maintain that Recursion’s drug discovery platform is highly efficient and that clinical successes and/co-development of pipeline assets could offset cash burn concerns.
Shares of Genius Sports (GENI) traded down more than 25% on Tuesday after reporting strong topline growth but disappointed relative to earnings expectations. We believe that, in the short term, as companies innovate and scale, revenue growth and product expansion are more important than operating margins. We also are impressed with Genius’s adtech platform and the leverage it is enjoying with the NFL’s official data. Genius Sports is a B2B technology infrastructure provider that collects, analyzes, and distributes data to sports leagues, sports betting platforms, and media partners.
Shares of Pinduoduo (PDD) traded down 15% today after missing revenue estimates by nearly 20% during the third quarter as its higher margin first party (1P) business effectively disappeared. Now 1P accounts for very little of Pinduoduo’s sales. The Chinese government may be behind the drop as high margin businesses are not consistent with “common prosperity”. Despite the miss, we maintain conviction in Pinduoduo's ability to scale its remaining 3P business, even with increased government scrutiny. Pinduoduo is a Chinese e-commerce platform that blends entertainment and shopping through group buying and mini games. The company also aims to digitalize the Chinese agriculture industry and increase the efficiency of the farm-to-table supply chain.