In a significant shift within the corporate landscape, the recent announcements from DrGlasses (stock code: 300622.SZ) have sparked noteworthy conversations among investors and market analystsThe company's control owners, Alexander Liu and Louisa Fan, have made headlines by declaring their intentions to reduce their stakes in the companyTheir announcement came on the evening of February 17, revealing plans to sell off a combined total of no more than 2.69% of the company's total share capital, executed through concentrated bidding or block trading methods.

As the market closed on February 18, the price of DrGlasses' stock stood at 43.41 yuan per share, positioning the potential shares for sale at an estimate total valuation of approximately 205 million yuanIntriguingly, this declaration of share divestment follows closely behind moves made earlier by other company executives and board members, who had recently completed their own rounds of selling shares.

In November 2024, a collective consortium of DrGlasses' aligned individuals, including Liu Kaiyue and board members such as Liu Zhiming and Zheng Qingqiu, initiated their own share sell-offThe total proceeds from these actions exceeded 119 million yuanObservers note that the concentration of share sales among stakeholders aligns with a broader trend of sell-offs amid rising stock valuations, leading to questions about the motivations and timing of such divestitures.

The current climate has been influenced by a market surge linked to the rising interest in AI glassesThis trend began around late July 2024, as the excitement surrounding advancements in artificial intelligence technologies catalyzed a dramatic escalation in DrGlasses' stock prices—an astonishing rise exceeding 450% as part of the company's market capitalization increase by over 8 billion yuanYet, despite witnessing a recent correction from its December 2024 peak, the stock price remains significantly elevated compared to pre-surge levels.

The drop on February 18 saw Dr

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Glasses' stock closing down 10.37%, a worrying trend that can create ripples of concern amongst investorsThis decline not only highlights a new low point for the year 2025 but underscores the volatile nature of speculative investments fueled by trends in emerging technologies, particularly AI.

The surge in interest in AI technology has garnered much media attention, with AI glasses emerging as one of the most economically viable hardware solutions presented in recent discussionsFollowing key announcements about Apple's venture into smart glasses and similar innovations anticipated from Meta, investors quickly sought out stocks connected to the 'AI glasses' narrativeThis resulted in a flourishing market where shares of DrGlasses, along with other companies like Mingyue and Goertek, saw unprecedented price increases.

As a player in the AI glasses sector, DrGlasses began exploring its potential in this market as early as 2023. Reports from 36Kr indicated the company took part in an early investment round for Thunderbird Innovations earlier in the yearFurthermore, during a recent investor engagement, DrGlasses disclosed an investment of 15 million yuan alongside Thunderbird in a new joint venture launched in August 2024. Apart from Thunderbird Innovations, partnerships have also been formed with other notable brands in the smart eyewear space, including XREAL and Rokid.

Despite these collaborations, it is essential to contextualize the nature of DrGlasses’ contributionsThe company primarily provides support in terms of channel development and marketing for these AI smart eyewear brands rather than engaging directly in innovative design or R&D processesIn August 2024, DrGlasses clarified its focus on delivering fitting services for smart eyewear, indicating that it does not independently conduct any significant development in this new area.

Historically, research and development investments within DrGlasses have appeared subparFrom 2020 to 2022, the company reported zero R&D expenditures

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It wasn't until the acquisition of two digital platform companies in 2023 that R&D costs began to surfaceHowever, even with these adjustments, the overall expenditures remained modest, with recorded R&D costs of only 4.67 million yuan in 2023, accounting for a diminutive 0.40% of total revenue.

Despite the limited investment in R&D, the stock prices soared when AI-themed investing captured the market's attentionFor instance, by July 18, 2024, the stock was priced at a low of 11.19 yuan, only to skyrocket to 61.71 yuan by late December of that same year, marking an impressive over 451% surge in just five monthsThis surge further propelled the firm's market cap by over 8 billion yuan, leading to pronounced gains for shareholders.

Yet, following this impressive run, several insiders began announcing their intention to sell off stockBy February 18, the stock had adjusted slightly but remains elevated at 43.41 yuan, continuing to reflect a 287.94% increase from the July lows.

Moreover, the sharp rises were accompanied by significant participation from speculative tradersBetween November and December 2024, DrGlasses found itself repeatedly appearing on hitting top trading boards, suggesting active interest from retail investors and opportunistic trading desksProminent trading seats from known names in the speculative trading community showed up in notable buy rankings, emphasizing the dynamic nature of trading surrounding this stock.

The financial trajectory of DrGlasses appears rather roller-coaster-like, with fluctuations in both revenue and profit figuresFounded in 1993 by Liu Xiao and Fan Qin in Shenzhen, DrGlasses has seen stellar growth—growing from 471 million yuan in revenue upon its 2017 IPO to approximately 1.176 billion yuan in 2023. However, from 2022 onwards, this growth narrative faced pressures, with the company experiencing revenue increases without corresponding profit rises.

Breaking down the numbers from 2021 through 2023, Dr

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Glasses reported revenues of 887 million yuan, 962 million yuan, and 1.176 billion yuan respectively while net profits hovered low at 95 million yuan, 75 million yuan, and managed a minor increase to 128 million yuanAs of the first three quarters of 2024, revenue growth saw a slight uptick of 1.09%, yet their net profit registered a sharp year-on-year decline of approximately 14.46%.

The underlying cause of these financial strains can be attributed to rising operational costs and increased sales expense ratios that have impacted the overall profitabilityFor instance, the gross margin for DrGlasses dropped to 61.84% in 2022, while the sales expense ratio escalated to 42.90%. This pattern continued to be reflected in the 2024 numbers, although the gross margin slightly declined to 58.6% in the third quarter.

In the context of its distribution strategy, DrGlasses has built a significant physical presence with a total of 530 retail establishments across China by mid-2024, comprised of 501 flagship outlets and 29 franchise storesHowever, despite the aggressive expansion during 2022, where the net growth of 32 new outlets was recorded, the persistent challenges from macroeconomic factors severely curtailed the anticipated benefits.

2023 ushered in a reevaluation of channel strategies, with the company leaning towards consolidating its physical outlets and increasing efforts towards enhancing online capabilitiesPositive results came in the form of bolstered online sales, recording a 44.50% growth in Gross Merchandise Value during this periodNonetheless, 2024 saw some of these online metrics reverse, with a notably significant dip, specifically a 32.31% decline in GMV in their live streams on Douyin for the first half of the year, precipitating another strategic pivot.

Collectively, these elements point to a company actively adapting to an evolving market landscape, returning its focus to physical channels while embracing the potential for online growth amidst challenges

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