RLX Technology: Balancing Growth and Regulatory Challenges Amidst Pricing Pressures

Analyst Lydia Ling of Citi maintained a Hold rating on RLX Technology (RLX – Research Report), reducing the price target to $2.25.

Lydia Ling’s rating is based on several factors affecting RLX Technology’s current and future performance. The company’s first-quarter results for 2025 were generally in line with expectations, showing a significant year-over-year revenue increase. However, there are concerns about regulatory changes and pricing pressures, particularly due to a shift towards larger-volume e-liquid products, which could impact profitability and growth in overseas markets.
Ling also notes the increasingly stringent regulatory environment in the global e-vapor industry, with new bans and taxes in various countries. This regulatory uncertainty has led RLX to adopt a cautious approach in its overseas expansion, focusing on optimizing its product portfolio and refining its distribution strategies. Despite the growth in e-liquid consumption, the market size is shrinking due to lower average selling prices of ‘Big Puff’ products, which could sustain pricing pressure and slow down the company’s growth. These factors contribute to the Hold rating, reflecting a balanced view of potential risks and opportunities.