Quhuo (QH) Stock Rallied 44.9% After Its H1 2022 Profits Surged

The Quhuo Ltd – ADR (NASDAQ: QH) stock price rallied 44.9% after releasing its interim financial results for the six months to June 30, 2022. The gig economy firm revealed that its revenue surged, and its profits soared 89.6% compared to a similar period last year.

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Investors cheered the news, as evidenced by the rally in QH stock. Quhuo noted that demand for its mobility and housekeeping services was the primary driver of its higher revenues, as the division registered a 32.2% and 24.7% increase in sales, respectively.

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The gig-economy company provides multiple services across China, including ride-hailing services, on-demand food delivery services, housekeeping and accommodation services, and shared bike maintenance.

Quhuo generated RMB1,763.8 million (US$263.3 million) from its on-demand delivery solutions, which slightly improved from the RMB1,757.6 million recorded in H1 2021.

Its mobility services division, which includes ride-hailing, shared-bike maintenance, and freight service solutions, generated RMB56.5 million (US$8.4 million). The higher revenues represent a 32.2% increase from the RMB42.7million generated in H1 2021.

Investors cheered the results, but Quhuo shares had given up most of their premarket gains at writing as investor sentiment shifted after the markets opened. Moreover, today’s rally occurred at a crucial support level; many hoped it would translate into a sustained uptrend.

Quhuo reported a net loss of RMB8.0 million (US$1.2 million), significantly improving from the RMB85.6 million operating loss recorded in H1 2021. However, investors’ sentiment remained negative, reflecting the overall attitude towards unprofitable growth stocks.

The company is in a robust financial position and looks ready to generate a profit soon.

So, would I buy Quhuo stock? The answer is yes. The company’s ADRs have fallen 86.76% this year and seem to have bottomed. However, I would buy a small stake while adopting a wait-and-see approach.

*This is not investment advice.

Quhuo (QH) stock price.

The Quhuo stock price rallied 44.89% to trade at $2.13, rising from Monday’s closing price of $1.47.