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Why Shares of Qudian Tumbled Today

What happened

Shares of Qudian (NYSE: QD) sank on Monday after the online consumer credit provider released its third-quarter report. The Chinese company's results were mixed relative to analysts' expectations, and Qudian reduced its full-year outlook for adjusted net income. As of 11:50 a.m. EST, the stock was down 17.3%.

So what

Qudian reported third-quarter revenue of 2,590.9 million yuan, or $362.5 million, up 34.3% year over year and $48.6 million higher than the average analyst estimate. The total number of outstanding borrowers inched up 3.4% to 6.3 million, while the number of active borrowers who drew down credit during the quarter rose 15.2% to 669,111.

Image source: Getty Images.

Non-GAAP (adjusted) net income per American depositary share was $0.47, missing analyst expectations by $0.04. In local currency, adjusted net income was up 52.9% year over year.

CEO Min Luo emphasized the company's focus on transaction services fees: "The third quarter marks our successful evolution to a balance sheet independent, technology services fee driven business. Our transaction services fee overtook as the largest in revenue scale and delivered staggering 150% growth from the previous quarter."

Now what

The main driver behind the stock's decline seems to be the company's guidance. Qudian now expects to produce adjusted net income of 4.0 billion yuan for the full year, down from a previous outlook of 4.5 billion yuan.

The guidance cut was due to the company's recent strategy shift to reduce risk and focus on higher-quality borrowers. That may be the prudent choice, but investors are not happy with the downsides.

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