Stock in Jianpu Tumbles 7% on Challenges in Financing Sector

As the lending industry continues to suffer from tightened regulations, Jianpu sees an uncertain future.

Anthony Russo
    Dec 09, 2019 4:00 PM  PT
Stock in Jianpu Tumbles 7% on Challenges in Financing Sector
author: Anthony Russo   

Jianpu Technology Inc.'s (NYSE: JT) stock plunged more than 5% in trading on Monday, to $1.47 per American depositary share, after the company announced weak revenue and mounting losses for the third quarter.

The Beijing-based company, which advertises financial products, said in a statement today that in the three months through September its revenue was $45.3 million, down 27% year-over-year.

Net loss widened to $51.5 million, or 24 cents per ADS, compared with $8 million, or 5 cents per ADS, a year ago, according to the report.

"As the 18 month law on trade disputes has heightened the risk of an economic slowdown, the growth of China has cut down to over 20 year low. Overall slowdown of macro economy and credit tightening continues to put downward pressure on consumer and SME lending," Daqing Ye, the co-founder, chairman and chief executive officer of Jianpu, told analysts in a conference call following the results today.

China's regulators have imposed strict policies in the financing sector over the past few quarters, which has caused many to exit the market. As of October, just 427 P2P firms were operating in China compared with 6,000 in 2015, the South Morning China Post reported last month.

Citing data from the market analysis firm iResearch, Jianpu describes itself on its website as a leading independent open platform for discovery and recommendation of financial products in China. 

"In recent months, regulatory authorities across a range of jurisdictions have issued quite a few new rules, regulations and guidance, including rules regulating personal consumer finance guidelines regulating cooperation between commercial banks and the FinTech companies," Ye said in the conference call.

He added, "We want our investors to be aware of this industry regulatory policy change and reform and mounting regulatory pressure. The industry entered into a relatively tightening cycle, which consequently has a impact on the supply of financial products being listed on our platform."

Jianpu said in its statement today that it expects to continue experiencing challenges in the near future and anticipates a decline in the financial products available on its platform. In the fourth quarter, the company said it expects to generate revenue in the range of $34.1 million to $36.9 million.

Under two separate share repurchase programs, launched in August 2018 and February 2019, Jianpu has bought back a combined $30 million of its ADSs, according to its statement. 

In September, an analyst at UBS Group has downgraded Jianpu to "sell" from "neutral," as reported by the Market Beat.