Shares Qudian Inc. (NYSE:QD) jumped to three months high on a high turnover of traded shares after the online credit provider reported solid financial results for Q3. While the stock has struggled for the better part of the year, recent rallies are already fuelling suggestions the stock could recoup a good chunk of the losses heading into 2019.
Qudian Price Analysis
The stock has rallied by more than 40% over the last two months as the upward momentum continues to gather pace at the back of a string of positive development. For starters, the company is fresh from delivering impressive Q3 financial results complemented by encouraging guidance.
The posting of impressive guidance comes as a surprise given that it comes at a time of rising tensions between the U.S and China. Renewed investor interest in the stock also comes on the company announcing a $300 million share buyback program.
Strengthening investor confidence in the company’s long-term prospects have helped shore up the share price. The stock has since embarked on a bullish run after bottoming out from all-time lows. After rallying to a key resistance level at the $6.29 level, the stock faces immediate resistance at the $8 a share level.
A rally followed by a close above the critical resistance level would mark the end of the underlying downtrend. On the downside, Qudian faces immediate support at the $4.80 level. A sell-off followed by a close below the critical support level could open the door for the stock to plummet to all-time lows on renewed short selling pressure.
Stellar Q3 Financial Results
Initial indications is that the stock will finish the year on a high as indicators point to further movements on the upside. Qudian sentiments in the market have inched a notch higher on reporting a 32.9% increase in sales that came in at $280 million. Net income, on the other hand, surged 5.1% to $99.6 million or $0.32 a share against average analyst estimates of $0.02 a share.
According to the Chief Executive Officer, Min Luo, Qudian solidified its leading position in the online consumer lending industry in the quarter. The number of registered users reached 70 million. Qudian boasts of over 29 million users in its credit platform. The extensive user base means the company remains well positioned to serve more users and in the process generate significant returns
“In particular, we continued to deliver a better service experience and set costs to borrowers at a highly competitive level, which drove an increase of more than 580,000 new active users to our platform in the third quarter with zero incremental marketing cost,” said Mr. Luo.
Buoyed by the third quarter performance the company expects its full-year net income to be greater than RMB2.5. The board approving $300 million share repurchase is one of the developments that appears to have excited the markets triggering the recent upswing.
Bottom line
Qudian strong performance, as well as positive outlook, comes at a time of rising tensions between two economic powerhouses, the U.S and China. While most companies appear to have crumbled under the tension, Qudian appears to be doing exceedingly well depicted by solid financial results as well as a positive full-year outlook.
The company’s large and growing user base is a clear evidence of what investors should expect going forward. Revenue growth should remain the order of the day as the company moves to target the current users.
Macroeconomic challenges and uncertainties should pose significant challenges going forward. However, Qudian has shown it can continue to rely on its technology-based and data-driven approach to navigate within deep pocket of users. The company posting stellar financial results going forward should be the catalyst that will continue pushing the stock up the charts.