Share prices for Shanghai-based online loan company 360 Finance tumbled on Friday after the release of its quarterly earnings results and the announcement of CEO Xu Jun’s resignation.
On the same day, a US law firm has said it has started investigating claims that the company violated federal securities laws.
Why it matters: The company is a major player in China’s fast-growing consumer finance space, rivaling companies such as Alibaba affiliate Ant Financial, Tencent’s WeBank, and JD Finance.
- Chinese internet finance companies are facing growing regulatory challenges as the government tightens rules to curb risks and clamp down on fraud.
Details: Shares of 360 Finance fell as much as 6% on Friday to $9.97 per share despite reporting second quarter revenue which more than doubled year on year. The company’s issue price was $16.50 per share when it went public in December.
- California-based shareholder rights law firm, Johnson Fistel LLP, is seeking to determine whether 360 Finance’s filings with the US Securities and Exchange Commission and subsequent investor communications contained untrue or misleading statements concerning its business and operations.
- Company president and co-founder Wu Haisheng was named CEO replacing Xu, who resigned from all managerial positions for “personal and family reasons.”
- The company reported Q2 revenue of $324.4 million, up 128% from the same period a year earlier, and net income of RMB 618.2 million (around $90 million).
Context: The online loan service provider is a spin-off of Chinese internet security giant Qihoo 360. The company debuted on Nasdaq last December.
- In its earnings report, the company said it is actively exploring opportunities to expand its fintech business outside of China into Southeast Asia and South Asia.
- 360 Finance was planning on launching a group-buying platform, TechNode reported in February, entering a competitive space dominated by e-commerce giant Pinduoduo.