---
title: "After Three Years of Turmoil, Has Three Squirrels' Stock Price Returned to Square One?"
description: "On July 12, Three Squirrels (SZ300783) saw 174 million restricted shares become tradable, accounting for 43.3975% of total shares, with a market value of about 3.982 billion yuan. Despite no shareholder disclosing reduction plans, the stock fell 2.7% on the first day, possibly due to previous clearance sales by original shareholders. The company faces challenges in product quality, brand image, and channel conflicts, leading to declining performance and market value."
author: "向善财经"
publisher: "New Distribution"
email: "zhaobo258@gmail.com"
telephone: "+8615854817671"
published: "2022-08-02"
language: "en"
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---

# After Three Years of Turmoil, Has Three Squirrels' Stock Price Returned to Square One?

> On July 12, Three Squirrels (SZ300783) saw 174 million restricted shares become tradable, accounting for 43.3975% of total shares, with a market value of about 3.982 billion yuan. Despite no shareholder disclosing reduction plans, the stock fell 2.7% on the first day, possibly due to previous clearance sales by original shareholders. The company faces challenges in product quality, brand image, and channel conflicts, leading to declining performance and market value.

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On July 12, Three Squirrels (SZ300783) saw 174 million initial restricted shares become tradable on the market. It is reported that this round of lifted restrictions accounts for 43.3975% of Three Squirrels' total share capital, equivalent to a market value of approximately 3.982 billion yuan.
Although no shareholder has disclosed a reduction plan for this unlock, on the first day of the unlock, Three Squirrels' stock price still fell by 2.7%. The reason for this performance may be related to the fact that after the previous round of unlock, several original shareholders chose to clear out their holdings in Three Squirrels.
As early as after the one-year initial restricted shares unlock (July 2020), NICE GROWTH LIMITED, the original second largest shareholder of Three Squirrels, and its concerted action party, the fifth largest shareholder Gao Zheng Capital Limited, began their reduction path.
The two originally held 20.61% and 4.22% of shares respectively, but by the end of the first half of 2022, Gao Zheng Capital Limited had completed its clearance, while NICE GROWTH LIMITED's stake had dropped to 13.57%, and it is currently still in the window period for a new round of reduction, planning to reduce no more than 6% of total shares.
In addition, the third largest shareholder, LT GROWTH INVESTMENT IX (HK) LIMITED, also significantly reduced its stake in Three Squirrels during 2020. Up to now, the above three major shareholders have collectively cashed out over 5 billion yuan from Three Squirrels.
From this perspective, it may be based on Three Squirrels' past experience with unlock reductions that the market made a bearish reaction in advance. After all, shareholders reducing their holdings during the unlock period can indeed be understood as normal exit and liquidation cash-out behavior. But for the sensitive capital market, reduction is more like an attitude towards the company's future, a potential viewpoint. Moreover, in recent years, Three Squirrels' performance has indeed been somewhat unsatisfactory...
**01** **Product and Marketing Failures: Does Zhang Liaoyuan Not Understand Gen Z?**
According to data from Tianyancha APP, in 2021, Three Squirrels achieved operating revenue of 9.77 billion yuan, a slight decrease from the previous year, with non-GAAP net profit of 320 million yuan, a year-on-year increase of 30.69%.
At first glance, Three Squirrels' data may look good, but if we look at the longer timeline, from 2017 to 2021, Three Squirrels' revenue rose from 5.554 billion yuan to 9.77 billion yuan, nearly doubling. However, non-GAAP net profit only increased from 278 million yuan to 320 million yuan, an increase of only 15%, already falling into the dilemma of "increasing revenue but not profit."
In addition, the Q1 2022 financial report released on the same day seems to further expose Three Squirrels' growth decline. In the first quarter of this year, Three Squirrels' revenue was 3.089 billion yuan, a year-on-year decrease of 15.85%; net profit was 161 million yuan, a year-on-year decrease of 48.75%.
It should be noted that due to the Spring Festival, the first quarter has always been the peak sales season for nut gift boxes, yet Three Squirrels still experienced a double decline in revenue and net profit. In response, Three Squirrels explained: the revenue decline was due to the shorter Spring Festival shopping period, the inability to ship online logistics orders due to the pandemic, offline store closures due to the pandemic, and the closure of offline extensive distribution business.
But if we compare horizontally, under the same market environment, Liangpin Shop achieved revenue of 2.942 billion yuan in Q1 2022, a year-on-year increase of 14.30%. Lai Yifen's Q1 revenue was 1.31 billion yuan, a year-on-year increase of 8.27%, with non-GAAP net profit increasing by 16.95% year-on-year. From this perspective, Three Squirrels' explanation attributing the performance decline entirely to the pandemic is clearly untenable.
Such weak performance data reflected in the capital market as a continuous plunge in stock price and market value. As of the close on July 22, Three Squirrels was at 21.7 yuan per share, almost falling from the highest of 89.95 yuan back to the closing price of 20.76 yuan per share on the day of its listing in 2019, and its market value has evaporated by over 27 billion yuan from its peak of 36 billion.
So where exactly does Three Squirrels' problem lie? According to Xiangshan Finance's observation, the fundamental reason for Three Squirrels' situation is its weak core competitiveness and high uncertainty.
First, at the product level, Three Squirrels has adopted the OEM production model of "subcontracting + branding" since its inception. The advantage of this model is that the company can avoid heavy asset operational risks through asset-light operations, while also focusing its business on downstream channels and marketing, which is conducive to rapid market expansion in the early stage through category expansion and high inventory turnover.
But the disadvantages are also obvious, mainly in two aspects: severe product homogenization and frequent food safety issues.
On one hand, in the consumer track, especially in the snack industry such as light processing of nuts, which is very close to raw materials, the technical threshold is already very low, making it difficult to rely solely on product innovation to gain market advantage. Therefore, leisure snack players including Three Squirrels and Liangpin Shop generally adopt the OEM model, which further exacerbates the serious homogenization of products and tastes in the snack market. Even without brand packaging, consumers can hardly distinguish which brand a product belongs to.
On the other hand, under the OEM model, because Three Squirrels cannot truly delve into the production and processing stages, coupled with the huge and complex SKU of snack products, it is difficult for Three Squirrels to ensure perfect quality control. For example, in 2017, the mold detection value of a certain pistachio product under Three Squirrels exceeded the national standard by 1.8 times, thus appearing on the "unqualified product list" of the 315 Gala. By 2020, the acrylamide content, a Class 2A carcinogen, in a certain original-flavored crispy potato chip under Three Squirrels exceeded international standards by about 3 times, and was publicly named by the Shenzhen Consumer Council.
And on July 25 this year, a netizen reported that his pregnant wife ate half a pack of Three Squirrels nuts and found that the deoxidizer in the food bag had leaked. However, Three Squirrels' official customer service staff responded that eating food deoxidizer by mistake is not harmful to health, and drinking more water can help it be excreted from the body, but pregnant women have special constitutions, so they should observe more and seek medical attention if there are problems...
From the above analysis, due to the existence of the OEM model, product strength cannot serve as Three Squirrels' core competitive barrier, and it even seriously drags down Three Squirrels' market reputation. But in fact, looking at the internet-famous consumer brand "Genki Forest," which also rose through internet marketing tactics, the biggest difference between it and Three Squirrels is that Genki Forest's marketing is centered on product research and development, with deep layout in the supply chain, rather than relying solely on marketing-driven growth. As its founder Tang Binsen said, the best way to break through is to work hard on the product itself. Although this path may be slow, it can go far.
Second, at the brand level, as is well known, products are the carrier of the brand, and marketing is an important means of brand building. As mentioned earlier, Three Squirrels' product quality and safety issues are frequent, which means its brand foundation is unstable. But to make matters worse, Three Squirrels, which rose through marketing, has also repeatedly stumbled in marketing in recent years, not only seriously affecting the brand image accumulated by Three Squirrels but also causing the current Z-generation young consumer main force to have brand aversion to Three Squirrels.
For example, the "squinty eye incident" of Three Squirrels' advertising model exposed this year sparked criticism and boycotts from many netizens for allegedly "deliberately vilifying Chinese people." Subsequently, netizens also dug up that Three Squirrels had illegally used red scarves and Young Pioneers information in earlier commercial advertisements, causing it to be thrust into the public opinion storm again.
In fact, in Xiangshan Finance's view, the Z-generation young consumer main force that Three Squirrels is targeting has two characteristics: first, contradictory consumption psychology. Z-generation young people pursue both quality and cost-effectiveness; they have both impulsive consumption traits, with obvious emotional consumption, and rational consumption attributes, focusing on actual efficacy. Second, they have high patriotic enthusiasm and strong national confidence. The most direct manifestation is the rise of "guochao" (national trend) new consumption, and the "wild consumption" incident sparked by Erke's donation after the Henan rainstorm.
For Three Squirrels' brand building, the former corresponds to product marketing, but under the OEM model, Three Squirrels' products are expensive and quality is hard to guarantee, making it difficult to gain consumer brand recognition; the latter's "patriotic" or "guochao" marketing dividend seems to have not been grasped by Three Squirrels, and the brand has even moved to the opposite side of Z-generation consumers through repeated marketing failures.
From this perspective, Three Squirrels, which has offended consumers at both the product and brand levels, naturally finds it difficult to support a higher capital market value and brand assets. Its future market growth potential is also greatly discounted in the eyes of institutional investors, and timely reduction and cashing out may become the most direct risk-averse measure.
**02** **Can Online and Offline Channels Not Be Both?**
In fact, after Three Squirrels announced its Q1 2022 financial report at the end of April, it also announced two major events: first, a comprehensive suspension of offline store expansion; second, disclosing an "Important Announcement on Comprehensively Promoting Strategic Transformation and Upgrading and Moving Towards High-Quality Development," which detailed Three Squirrels' plans, including transitioning from e-commerce to omni-channel, fully suspending store expansion, increasing R&D investment, and expanding distribution channels.
From the above two announcements, it is not difficult to see that the focus of Three Squirrels' transformation seems to be concentrated on channels. As is well known, Three Squirrels' rise benefited from the explosion of internet e-commerce traffic dividends, and the traffic-driven marketing approach formed by this was one of Three Squirrels' killer moves in its early land-grabbing phase.
But the turning point appeared in 2018, when Three Squirrels' sales expenses increased by 35.83% year-on-year, while revenue growth was only 26.05%, and net profit fell by nearly 20%, marking the first time that performance growth was lower than the growth rate of sales investment.
Under such circumstances, many snack players, including Three Squirrels, realized that the era dividend of traffic e-commerce was fading, and focusing on offline channels became the new consensus in the snack industry. In response, Zhang Liaoyuan also began to actively embrace the offline channels he had once discarded, opening offline stores and even setting a small goal of opening 10,000 stores within 5 years at the end of 2019; on the other hand, he began to establish an offline distribution network to balance the revenue proportion of online and offline channels.
But according to Xiangshan Finance's observation, Three Squirrels' current channel construction has a sense of "online and offline cannot be both."
First, the revenue game between online and offline. Under the influence of continuous weak performance growth and repeated pandemic outbreaks, Three Squirrels first closed over 300 stores in 2021, and then announced a comprehensive suspension of store opening plans in April this year. At the offline channel distribution level, public data shows that although Three Squirrels' new distribution business achieved revenue of 1.609 billion yuan in 2021, a year-on-year increase of 38%, it only accounted for 16.47% of total revenue, far from comparable to online channels.
Perhaps to further increase its presence in the offline market, Three Squirrels implemented a new distribution model last year, mainly based on moderate distribution, with regional distribution as the core, supplemented by platform distribution and new channel business.
The launch of the new distribution model did bring Three Squirrels nearly 440 million yuan in revenue growth. But the problem is that with almost equal revenue in 2020 and 2021, third-party e-commerce platform revenue decreased by 725 million yuan. This means that Three Squirrels' actual market size has not expanded, but has fallen into a zero-sum game growth trap between online and offline channel revenue.
Second, the pricing game between online and offline. Distribution emphasizes small profits but quick turnover, but under the OEM model, Three Squirrels has very little room for product price negotiation, making it difficult to meet the profit needs of offline distributors to break even. But if distributors choose to increase prices layer by layer, it may cause a chaotic pricing situation where Three Squirrels' offline store products and online platform prices differ greatly, seriously affecting Three Squirrels' brand value image.
Perhaps for this reason, according to Three Squirrels' 2021 annual report, regional distribution officially started recruiting in October 2021 and began distributing to national distribution terminals in December of the same year. But within just three months, all five major regions across the country saw varying degrees of distributor reduction. Among them, only the eastern and southern regions saw reductions below 20%, while the northern region had the highest reduction rate, reaching a staggering 38.83%.
From the above data, in the pricing game between the brand and distributors, Three Squirrels seems to have the upper hand.
But the problem is that draining the pond to catch fish is not a long-term solution, and whether Three Squirrels can find a win-win balance point is unknown. But the only thing that is certain is that with Liangpin Shop and Lai Yifen watching covetously, time is running out for Three Squirrels...
Source: Xiangshan Finance (ID: IPOxscj)
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