Why Qudian Inc. Stock Dropped Another 16% on Wednesday
Things took a turn for the worse for investors in Chinese online small consumer credit provider Qudian Inc. (NYSE: QD) on Wednesday, with the shares closing down 16.4%. Coming on the heels of Tuesday's 4% drop -- and the six days of declines that preceded that -- November has to have Qudian investors feeling downright miserable.
So what's gone wrong? China is "clamping down" on online micro-lending, and instructing its provincial governments "to suspend regulatory approval for the setting up of new internet micro-lenders." As I explained yesterday, that didn't particularly worry me -- preventing the setup of new rivals could actually turn out to be good news for Qudian, which is already all set up and running fine.
Today, however, Reuters reported that in addition to preventing new online companies from setting up business, China is also telling its regulators to restrict "new approvals for micro-loan firms to conduct lending across regions." While vague, this new rule sounds like more of a threat. If it translates into restrictions on Qudian's ability to issue new loans to its customers, it could slam the brakes on the company's over 300% rate of sales growth.
Source: Fool.com
