LXR – April 2022

Our initial investment thesis for LX was that its product sourcing competitive advantage and classic retail business model can drive sustainable hypergrowth revenue through multiple digital channels, as well as near term profitability – a powerful combination.

Recent 4Q21 results detailed in this report show that the company is producing exactly that (revenue was up +89%/y and EPS was close to positive. Yet despite this attractive profile the stock continues to trade at a surprisingly inexpensive 0.4x 2022E revenue. The recent broad market sell-off is likely to produce near term consolidation amongst many early stage or burgeoning companies. Unlike many of its retail e-commerce peers, LXR has a strong balance sheet and positive FF.

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