Chinese Fintech Stock Plunges As Regulatory Clampdown Forces Guidance Withdrawal

Shares of Qudian Inc QD, a Chinese small consumer credit company specializing in student loans, are pulling back on more than average volume following an announcement regarding withdrawal of the company's annual guidance.

Qudian also announced an authorization to repurchase its ADSs or Class A ordinary shares worth up to $500 million over the next 30-month period.

Suspending Guidance

Qudian decided to withdraw its 2019 guidance, blaming the action on the recent regulatory and operating environment. The company also said it will not issue guidance in the near term.

The company last June had raised its net income guidance, citing its operating outlook and market conditions.

Tighter Regulations Hurt

The company said recent regulatory developments such as further restriction on loan collection practices, more stringent user data privacy rules and the requirements for P2P lending platforms to orderly exit their P2P businesses, have reduced the availability of funding for consumer credit.

This, according to the company, has increased delinquency rates across the industry and also its loan portfolio.

In order to take on these industry headwinds, the company has implemented stricter standards for loan approvals, negatively impacting transaction volumes, which is likely to have a more pronounced impact on its revenues.

The company expects fourth-quarter net income to take a hit from increased loss of guarantee liability and provision due to the rise in delinquency rates.

Qudian shares were down 15.72% to $3.70 at time of publication.