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Why Shares of Leju Holdings Are Down Today

By Bram Berkowitz – Aug 31, 2021 at 11:17AM

Key Points

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The company reported earnings results from the second quarter of 2021.

What happened

Shares of the Chinese real estate services provider Leju Holdings (LEJU -1.33%) had fallen nearly 7% as of 11 a.m. EDT today after the company reported earnings results from the second quarter.

So what

The company reported a loss of nearly $50 million, compared to a $1.2 million profit for the second quarter of 2020, primarily due to bad-debt provision. Total revenue climbed to more than $301 million, up 8% year over year.

The increase in revenue was driven by a 13% year-over-year increase in the company's e-commerce business, while its online advertising service revenue decreased 6% year over year.

"In the first half of 2021, amid tightening regulations in China's real estate industry, the pressure on real estate developers' operations and sales continued to increase," Geoffrey He, Leju's CEO, said in a statement. "Against this challenging backdrop, Leju's overall business was able to maintain steady growth."

Person drawing red squiggly line in downward direction.

Image source: Getty Images.

Now what

The quarter wasn't as bad as it looked, as almost the entire loss can be attributed to a loss from one real estate developer client.

But Chinese stocks that trade on American exchanges have been very risky of late, with regulation always a looming threat. Intervention from the Chinese government in the country's real estate market might even be more of a threat than in other industries, which is why I would evaluate this company with extreme caution.

Bram Berkowitz has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.

Stocks Mentioned

Leju Holdings Stock Quote
Leju Holdings
LEJU
$1.48 (-1.33%) $0.02

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