Dada Nexus Earnings: Improved Results, but Time Will Tell if New Strategy Is Successful

We maintain our fair value estimate of $2.00 per share for Dada Nexus after it reported second-quarter 2024 revenue of CNY 2.45 billion, which represented a 9.5% decline year on year, but was better than our forecast of a 14% decline. After questions were raised about its accounting practices—where the revenue and cost of goods were inflated and forced the company to restate its previous financial statements—the company decided to lower its incentives and change its strategy to address its heavy cash burn. Questions remain as to whether the new strategy will eventually pan out, but Dada Nexus was able to narrow its net loss margin by about 100 basis points sequentially this quarter to 12%.