Key takeaways:

• Qudian’s stock has closed at an average price of less than $1 over the last 30 trading days, putting it out of compliance with New York Stock Exchange listing rules
• Analysts have suddenly become more positive on the company, with six rating it a ‘buy’ or ‘strong buy’ in February after it received mostly ‘hold’ ratings in previous two months

By Doug Young

What’s interesting in this case is that the analyst community has suddenly become quite bullish on Qudian, perhaps indicating they think the company has finally turned a corner and could be due for a rebound that many of its peers have already started experiencing.

In fact, it’s quite revealing that Qudian is getting any analyst coverage at all, since companies of its size –$253 million at Thursday’s market close – are rarely covered at all. Only one such analyst asked a question on the company’s latest earnings call back in December, indicating that interest in Qudian’s sputtering story was low. But that seems to be changing.

The company was rated as a “hold” or “underperform” by four analysts polled by Yahoo Finance in December and January – not exactly exciting stuff for investors. But something seems to have shifted this month, with the number of analysts now following the company suddenly nearly doubling to seven. What’s more, three of those rate Qudian a “strong buy” and another three rate it a “buy,” while just one has a “hold” rating.

Of course, it’s possible there’s a bug in Yahoo Finance’s data, since there’s no apparent reason for the sudden shift in sentiment. Still, it’s possible many might believe the stock is too beaten down at current levels and the company could be on the cusp of returning to revenue growth soon, ending several years of declines dating back to 2019 when China’s financial regulator turned up its campaign to rein in the country’s fintechs.

The ongoing crackdown saw most of China’s major fintechs divide into two camps, one group continuing as direct lenders while the other switched to the less capital-intensive and more lightly regulated role of middlemen loan facilitators. Qudian, which started out as a provider of small loans to college students, chose to continue as a direct lender by providing young consumers with small loans to buy items like smartphones and laptops.

That report in mid-December sparked a selloff that sent Qudian’s shares below the $1 mark. They’ve traded as low as low as $0.81 since then, and have also finished a few days above the $1 mark. But the bottom line, according to the latest announcement, is that the stock’s average closing price has been below $1 for the last 30 trading days, putting it out of compliance with New York Stock Exchange listing rules.

Delisting threat

In the boilerplate announcement, Qudian said it has six months to return to compliance by bringing its shares above the $1 level. As if to help the company reach that goal, investors bid up the stock by 2% to finish at exactly $1 in Thursday trade. The gain continued a modest rally that has seen the shares rise more than 17% from $0.85 on Jan. 27 to their current level.

Still, the company is a far cry from the $6 billion it was worth when it raised $900 million by selling its shares for $24 apiece in its October 2017 IPO. It’s been mostly downhill from there as China’s financial regulator has gradually tightened the screws on a formerly freewheeling private financial sector with very little experience at what it was doing, including risk management.

The big majority of China’s fintechs folded during the cleanup. But most of the ones still in business have returned to a growth track, often in the role of loan facilitators rather than actual lenders.