TLDR:
- Upexi reported 34% revenue decrease to $14.4M in Q3 2024
- Company is undergoing major restructuring to reduce debt and operational costs
- Net loss increased to $4.1M from $1.7M in same period last year
- Company announced investigation of possible stock manipulation after 12-for-1 reverse split
- Stock surged over 300% on October 25, with trading volume reaching 14.71M vs 173.61K average
Upexi Inc. (NASDAQ: UPXI) has reported challenging third-quarter results while simultaneously dealing with unusual trading activity that sent its stock soaring over 300% on October 25, 2024.
The multi-faceted Amazon and Direct-to-Consumer brand owner reported third-quarter fiscal 2024 revenues of $14.4 million, representing a 34% decrease from $21.9 million in the same period last year. The company attributes this decline primarily to reduced recommerce revenue through Amazon channels and wholesale operations.
During the quarter ending March 31, 2024, Upexi recorded a net loss of $4.1 million, compared to a $1.7 million loss in the same period last year. The increased loss stems from lower sales and a non-cash inventory write-off of $1.7 million.
Cost of revenue decreased 19% to $11.6 million compared to $14.3 million in the previous year. The company’s gross profit saw a decline of approximately $1.7 million, largely due to inventory write-offs related to obsolete or unsellable products.
Sales and marketing expenses dropped 32% year-over-year as management refined its strategies to focus on long-term recurring sales growth. General and administrative expenses decreased by 8% compared to the same period last year.
The company reported cash holdings of $498,287 as of March 31, 2024. However, subsequent events have improved its financial position, including a new lease agreement reducing operating expenses and the sale of its warehouse for approximately $1.4 million after mortgage repayment and transaction costs.
On October 25, 2024, Upexi announced it was reviewing trading activity for possible stock manipulation related to its recently completed 12-for-1 reverse stock split implemented on October 3. The company disclosed that before announcing the split on September 27, it had fewer than 5,000 shareholders.
Trading volume surged to 14.71 million shares on October 25, compared to the company’s average daily volume of 173,610 shares over the past 100 days. Five brokerage firms requested 199,059 roundup shares, representing approximately 19% of Upexi’s outstanding stock.
The company noted that these roundup share requests appeared to occur during a three-day trading period between the reverse split announcement and its effective date, resulting in an approximately 40-fold increase in individual shareholders.
The restructuring efforts continue as management works to create what they describe as a “leaner more scalable business with an improved balance sheet.” The company has discontinued sales of certain electronic products in its Amazon channels after analyzing high return rates and lower margins.
Branded Product sales showed slight increases in pet care products, children’s toys, and other items not heavily dependent on Amazon sales channels. The company plans to focus on more consistent sales from both product revenue and service revenue streams.
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