Seres Revenue Up 30% but Profits Down: What's Going On?

Let's start with some numbers. The stock price has dropped from a market cap of over HK$220 billion when it listed on the HKEX last November to about HK$72.85 billion on August 20 this year—a two-thirds decline in nine months. Q1 revenue was RMB 25.75 billion, up 34.5% YoY, but net profit attributable to shareholders was only RMB 750 million, a mere 0.9% YoY increase. Q2 was even more direct: AITO (Wenjie) posted a pre-announced loss of nearly RMB 2 billion. Revenue is rising, sales are rising, yet profits have turned into losses. No matter how you look at it, the math doesn't add up.