Member-based Social E-Commerce Yunji Receives NASDAQ Delisting Warning
Member-based e-commerce platform Yunji received a delisting warning from the NASDAQ on September 27, and now has a grace period of 180 days to regain compliance. Yunji later announced that “the company intends to solve this problem within the prescribed grace period.”
The delisting warning letter stated that because the closing price of American depositary shares of Yunji in the past 30 consecutive working days was less than $1 per share, it no longer met the minimum bid requirements stipulated by NASDAQ Listing Rules. This also means that before March 28, 2022, the closing price of the Yunji‘s US stocks must reach $1 or more per share for at least 10 consecutive trading days before the company could be delisted.
Since receiving the delisting warning letter, the stock price of Yunji rebounded from its bottom, but only managed to close at US $1.08/share on October 20. Shen Meng, executive director of Chanson Capital, analyzed that, “Stocks with less than one dollar can still return to the minimum standard through market value management or multi-share integration. But the question is whether such a short-term approach can really improve the performance. If the company itself cannot optimize its growth, it may continue to problems.”
In fact, from 2018 to 2020, the revenue of Yunji has steadily declined with the company’s net losses increasing year after year. Although the company’s net profit improved in the first and second quarters of this year, its revenue continued to decline. What the decline of the company’s stock price seems to indicate are the problems faced by the development of membership-based social e-commerce.
According to industry analysis, from the perspective of consumer economy, there is a win-win for members and businesses in the paid membership-based social e-commerce. However, “the foundation of membership companies lies in better quality and dedicated products and services. If the so-called member-based e-commerce only uses members to attract more users, this model is not sustainable.”
Yunji is a social-driven member e-commerce platform having released its App in May 2015. The company was listed on the NASDAQ on May 3, 2019, becoming the second domestic social e-commerce enterprise listed in the United States after Pinduoduo.
Data from 2018 to 2020 shows the net losses of Yunji gradually increasing, totalling 59.688 million yuan ($9.35 million), 126 million yuan and 146 million yuan respectively. Total operating income also decreased, hitting 13.015 billion yuan in 2018, 11.672 billion yuan in 2019 and 5.53 billion yuan in 2020.
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