Shares of Qudian (NYSE:QD) tumbled on Thursday after the Chinese online consumer finance company withdrew its annual guidance. A massive share buyback program wasn't enough to quell the market's concerns. As of 11:45 a.m. EST, the stock was down about 15.6%.
Qudian has pulled its fiscal 2019 guidance and will not issue any guidance in the near term. The company blamed uncertainty related to the regulatory and operating environment.
Qudian pointed to multiple recent developments in the online consumer finance industry in China, including restrictions on loan collection practices, data privacy rules, and a requirement for peer-to-peer (P2P) lending platforms to exit the peer-to-peer business. China announced the P2P lending crackdown in November.
Qudian said that these changes have reduced the availability of funding for consumer credit while increasing delinquency rates. The company's transaction volumes have decreased substantially due to significantly stricter standards for loan approvals.
"As a precautionary measure in the current environment, the Company has deployed a conservative and prudent strategy to reduce loan volumes and has suspended its credit trial program," Qudian said in the press release announcing the news.
Along with the guidance withdrawal, Qudian announced a new $500 million share repurchase program. With a market capitalization below $1 billion after Thursday's plunge, the buyback will substantially reduce the number of shares.
Qudian's guidance pull is a good demonstration of the risks inherent in investing in Chinese companies, especially those heavily exposed to regulation. The stock is now down nearly 90% from its all-time high.