Vaping products specialist in China RLX Technology (NYSE: RLX) made a favorable debut in the US stock market. After selling for $ 12 per share in the initial public offering (ADS) in the initial public offering, the company opened $ 22.34 per ADS on Friday, eventually rising to $ 29.51.
In its IPO prospectus, RLX introduced a claim as the “No. 1 branded e-vapor company in China” with its RELX range of vaping goods. The company said its market share in the first three quarters of 2020 was nearly 63%, and that it was number 1 in brand awareness in the country.
Like many companies that have come to the stock market recently, RLX is growing fast. It recorded a net income of more than 2.20 billion yuan ($ 341 million) in the first three quarters of 2020, almost double the 1.14 billion yuan ($ 176 million) in the same period of 2019.
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Unlike many new arrivals, the Chinese company is profitable. Its net income was 109 million yuan from the first to the third quarter of 2020, compared to the year-ago figure of 97 million yuan.
RLX intends to use approximately 30% of the estimated $ 1.35 billion it raised in the IPO for research and development; 25% per piece should go to strengthen its retail and distribution efforts and to improve its supply chain. And the rest will be devoted to general corporate purposes and working capital.
The company currently has only a slight presence in the US market and faces a particularly frightening counterpart here. Altria (NYSE: MO) with the next generation IQOS for all smoking products.
On Friday, Altria’s shares more or less moved in conjunction with the modest decline of the S&P 500 index. This indicates that investors are not too worried about its new competitor in the stock market.