Shares of RLX Technology (NYSE:RLX), a manufacturer of vaping products, fell as much as 46% in trading on Monday after reports came out that China will put restrictions on e-cigarettes and other tobacco products. At 1 p.m. EDT today, shares were still down 43.6% for the day.
The Global Times, a Chinese newspaper, said the government is looking to change its laws to allow regulation of e-cigarettes and other new tobacco products.
This won’t necessarily have a huge negative impact on RLX Technology’s business, but the prospect of more regulation isn’t seen as good news by investors. And that’s why the stock is down today.
RLX was already a fairly speculative stock with a huge market cap of $16.9 billion and very little profit. And with the stock cratering after its IPO, the momentum is gone. Earnings are coming out later this week, and management will have to tell investors just how big the impact of these regulations could be and where RLX will be as a growth stock in the future.
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