What happened
Shares of Qudian (QD 0.40%) were soaring Monday after the Chinese tech company provided a favorable update on the meal kit business it launched in March under its new division, QD Food.
As of 12:01 p.m. ET, the stock was up 50.4%.
So what
Just four months after QD Food's launch, Qudian said it now has 15 facilities delivering ready-to-cook meals to more than 200 cities and towns across China.
On Sunday, the company hosted an event on Douyin, a popular Chinese livestreaming platform, and said it sold 9.56 million dishes. It was also the most-viewed stream on the platform for a period of more than 10 hours.
"To capitalize on the burgeoning popularity of livestreaming, e-commerce, and the vast market demand for ready-to-cook foods, we will continue developing high-quality products and delivering outstanding consumer experiences," CEO Min Luo said.
Qudian has historically operated as a consumer finance company, offering small loans to individuals, but the growth of its meal-kit business shows the company's potential in new categories.
NYSE: QD
Key Data Points
Now what
The popularity of meal kits boomed in the U.S. a few years ago, but that trend has mostly faded here. Companies like Blue Apron have struggled to turn a profit, and their sales declined after initial spikes. The industry also suffered from low barriers to entry, with a growing number of competitors fighting over what now appears to be a smaller market than they expected.
It's unclear how this trend will play out in China. Qudian's early results seem promising, but investors should be wary of the possibility that the pattern the meal kit segment followed in the U.S. will be repeated.
Monday's 50% pop may seem excessive considering that it was spurred by an announcement that didn't include any financial numbers, but that's likely more of a reflection of the volatility in Chinese stocks than the news itself. Qudian is still down by more than 80% over the last five years.
Given the rapidly evolving conditions in the Chinese economy and the unclear future of U.S.-listed Chinese stocks, investors should expect Qudian's share price to remain volatile.
