To The Moon

$RLX Technology(RLX)$ is scheduled to release its fiscal Q2 2025 earnings report on Friday, August 22, 2025, before the market opens.

Revenue: Analysts are expecting revenue of around $725.00 million for the quarter. In Q1 2025, the company's revenue was $111.35 million, which was significantly below analyst expectations. Monitoring if the company can meet or exceed the Q2 consensus will be crucial.

Earnings Per Share (EPS): The consensus EPS forecast is $0.18 per share. The company missed analyst expectations in Q1 2025, reporting an EPS of $0.02 against a consensus of $0.17. Beating or missing this new estimate will likely drive the stock's immediate movement.

Based on RLX Technology's (RLX) fiscal Q1 2025 earnings report, here is a summary of its performance and the key lessons from its guidance.

Summary of Q1 2025 Earnings

RLX Technology reported a strong financial performance in the first quarter of fiscal year 2025, which was well-received by the market.

Revenue Growth: The company's net revenues showed a significant increase, rising 47% year-over-year to RMB 808.3 million (approximately $111.4 million). This performance demonstrated the company's ability to drive growth even in a challenging market.

Improved Profitability: RLX turned an operating loss of RMB 51.6 million in Q1 2024 into a GAAP operating income of RMB 77.4 million in Q1 2025. On a non-GAAP basis, operating income surged by 354% to RMB 105.8 million. This improvement was attributed to effective cost optimization and operating leverage.

Gross Margin: The company's gross margin improved to 28.6% from 25.9% in the same period last year. This was driven by a more favorable revenue mix and cost control initiatives.

Strategic Focus: A major factor in the company's performance was its strategic pivot. In response to regulatory changes, particularly the ban on disposable e-vapor products in some markets, RLX focused on developing and promoting "Big Puff" products. This innovation successfully attracted users and positioned the company to adapt to the evolving industry landscape.

Lessons from Guidance and Outlook

RLX's guidance for the rest of the year and its commentary on the industry offer valuable insights for investors.

Lesson 1: Adaptation is Key to Survival in a Regulated Industry. The e-vapor industry is heavily influenced by regulatory shifts. The company's management highlighted that these changes will continue to impact the industry and compel manufacturers to adapt. By swiftly introducing "Big Puff" products to address the ban on disposables, RLX demonstrated that anticipating and adapting to regulatory changes is not just a defensive measure, but also a source of new market opportunities.

Lesson 2: International Expansion is a Critical Growth Driver. A key factor in RLX's strong revenue performance was its international expansion efforts. In an environment where the domestic market faces headwinds, a robust international strategy can provide a buffer and a path to sustained growth. This highlights the importance of diversification for companies operating in sectors with concentrated regulatory risk.

Lesson 3: Cautious Optimism is a Realistic Stance. While the company's Q1 performance was strong, management expressed "cautious optimism" for the future. They projected positive dollar growth for the year but acknowledged that the overall industry might experience negative trends. This balanced view is a lesson in managing expectations—it indicates that while the company is confident in its own strategy, it is also realistic about the broader challenges. Investors should pay attention to this measured tone, as it can be a more reliable indicator than overly aggressive projections. The company also anticipates that industry dollar value growth will stabilize by 2026, aligning with a return to a "normal growth trajectory" based on e-liquid consumption.

Key Metrics for Investors

Investors should focus on the following key metrics to evaluate RLX's performance:

Gross Margin and Net Margin: Keep an eye on the company's profitability. In Q1 2025, the gross margin was 32.6% and the net margin was 21.38%. A decline in these metrics could signal increased costs or pricing pressures.

Guidance: Pay close attention to management's outlook for the next quarter and the remainder of the fiscal year. Forward-looking statements on revenue, profitability, and any strategic initiatives (such as international expansion) will be critical for assessing the company's future prospects.

RLX Earnings Forecast: Next quarter’s earnings estimate for RLX is $0.03 with a range of $0.03 to $0.03. The previous quarter’s EPS was $0.02. RLX beat its EPS estimate 0.00% of the time in the past 12 months, while its overall industry beat the EPS estimate 57.41% of the time in the same period. In the last calendar year RLX has Preformed in-line its overall industry.

RLX Sales Forecast: Next quarter’s sales forecast for RLX is $100.94M with a range of $100.94M to $100.94M. The previous quarter’s sales results were $97.36M. RLX beat its sales estimates 0.00% of the time in past 12 months, while its overall industry beat sales estimates 53.05% of the time in the same period. In the last calendar year RLX has Preformed in-line its overall industry.

RLX Technology (RLX) Price Target

Based on 4 analysts from Tiger Brokers offering 12 month price targets for RLX Technology in the last 3 months. The average price target is $2.79 with a high forecast of $3.98 and a low forecast of $2.25. The average price target represents a 24.78% change from the last price of $2.24.

Short-Term Trading Opportunities

Trading RLX stock post-earnings could present opportunities, but it's important to consider the potential for volatility and the company's recent performance.

Volatility: Earnings reports often lead to significant price swings. The stock's recent performance shows a pattern of missing analyst expectations on both revenue and EPS, which has historically led to negative sentiment.

Price Reaction to Earnings Beat/Miss:

If RLX beats expectations: A strong performance on revenue and EPS, combined with positive guidance, could lead to a significant short-term rally. This could create an opportunity for a long position, but be aware of potential profit-taking and the stock's overall downtrend since its IPO.

If RLX misses expectations: Another miss could lead to a further sell-off. This could be an opportunity for a short position. The company has a history of disappointing analysts, so a miss is a real possibility.

Technical Analysis:

Support and Resistance: Look at the stock's current price levels and identify key support and resistance levels. A drop below a major support level could signal a new downtrend.

Moving Averages: Pay attention to how the stock's price interacts with its short-term and long-term moving averages. A move above the long-term moving average would be a bullish signal, while a move below the short-term average would be bearish.

Risk Factors: The e-vapor industry, particularly in China, faces significant regulatory challenges. Any commentary from management on navigating these regulations will be a major factor in investor sentiment. Also, the company's recent track record of missing estimates adds a layer of risk to any trading decision.

We are seeing RLX continue its positive momentum and it is now trading above the short-term level of 12-EMA and 26-EMA, the bulls are in control and they are attempting to make a daily uptrend continuation, and we could see this potentially possible as the rotation shift is still ongoing and we could probably see investors going for small caps of the such ADRs stock.

Summary

RLX Technology is set to release its fiscal Q2 2025 earnings on Friday, August 22, 2025. Investors should focus on a few key metrics to gauge the company's performance. The consensus revenue and earnings per share (EPS) forecasts are approximately $733.7 million and $0.18, respectively.

After the company missed analyst estimates in Q1 2025, a strong performance that beats these new forecasts could lead to a short-term rally. Conversely, another miss could trigger a further sell-off. Key factors to watch beyond the headline numbers include gross and net margins, which indicate profitability, and management's forward-looking guidance. Commentary on the company's "Big Puff" product strategy and international expansion efforts will be particularly important for assessing future growth potential in a challenging regulatory environment.

For short-term traders, the post-earnings period will likely see high volatility, offering opportunities for both long and short positions depending on the results. However, be mindful of the stock's recent downtrend and the inherent risks of a volatile and highly regulated industry.

Appreciate if you could share your thoughts in the comment section whether you think RLX could provide an earnings beat which indicate profitability and also guidance that could possibly lead to a short-term rally.

@TigerStars @Daily_Discussion @Tiger_Earnings @TigerWire @MillionaireTiger appreciate if you could feature this article so that fellow tiger would benefit from my investing and trading thoughts.

Disclaimer: The analysis and result presented does not recommend or suggest any investing in the said stock. This is purely for Analysis.