Qudian CEO expresses ‘regret’ over silence as share price tumbles 58pc since October listing
Quidian CEO Luo Min concedes he made a ‘mistake’ by not speaking out publicly to counter criticism levelled at the company and other online lenders over excessive interest rate charges
Qudian, a mainland Chinese online loan provider, has seen its New York shares tumble sharply since listing in October, prompting an apology from CEO and founder Luo Min during the weekend, who says he regrets not doing a better job of communicating with the media to counter criticism levelled at the company.
In a WeChat posting the 34-year-old Luo conceded it was “wrong” to turn away media interviews during a sensitive period when critics lashed out at the firm and other lenders, accusing them of exploiting vulnerable students and blue collar workers with ultra high interest rates.
The controversy prompted China’s financial watchdogs to roll out tighter scrutiny on the industry last year.
The company’s New York Stock Exchange listed shares have tumbled 58 per cent from their US$29 closing price during debut trade on October 18. The shares touched an intra day high of US$35 during the debut session. The shares ended Friday trade in New York at HK$12, falling 1.5 per cent for the session.
“My ‘adult ceremony’ came too fast after Qudian’s IPO last October, I was not prepared to face the public and media then,” wrote Luo in the WeChat posting on Sunday, after being silent since November, declining all media interview requests. “As CEO of a listed company, I was very reluctant to communicate with the outside world, this was a mistake I made in terms of cognition.”
“Now I realised it was wrong to handle things in that way,” he said.
Qudian provides loans for small businesses and individuals who have a hard time securing credit from banks. The company handled 38.2 billion yuan (US$5.6 billion) in transactions for 7 million active borrowers in the first half of 2017, according to its initial offering prospectus.
Almost 60 per cent of the company’s transactions in 2016 involved annualised interest rates above 36 per cent. The company reported revenue and net profit were up more than 300 per cent in the third quarter of 2017 on year. Profit for the July to September period reached US$97.8 million while revenue rose to US$218.1 million.
Qudian said in reply to a request by the Post on Monday seeking an interview that a company official would follow up within a day.
Qudian is backed by Alibaba Group Holding affiliate Ant Financial. Alibaba is the owner of the South China Morning Post.