What happened
FinVolution Group (FINV +0.87%) saw its stock price decline 16.2% this week, from last Friday's close through 12:50 p.m. ET today, according to S&P Global Market Intelligence. The stock was trading at about $3.85 per share on Friday, down about 22% year to date.
The markets ticked up this week, as the S&P 500 was up 1.6%, the Dow Jones Industrial Average gained 0.2%, and the Nasdaq Composite rose 4.4% this week, as of 12:50 p.m. ET today.
So what
FinVolution Group is a Chinese fintech that operates an online platform where underserved borrowers can connect with financial institutions for loans.
There were a couple of primary catalysts for its move this week, including the release of its fourth-quarter and year-end 2022 earnings report. The firm reported a 25% increase in revenue to 3.1 billion RMB, or $442 million, in the quarter. That increase was driven by a 25% jump in transaction volume on its platform.
While the vast majority of the transaction volume is in the Chinese market, the company has expanded internationally, where it saw a 41% increase in international transactions.
NYSE: FINV
Key Data Points
However, while revenue was up, net profit declined 14% year over year to 556 million RMB, or $81 million. This was primarily due to higher credit losses for quality assurance commitment, which spiked because of the increase in loan volume as well as higher outstanding loan balances. In addition, the 90-day delinquency ratio jumped from 1.26% a year ago to 1.41% in the fourth quarter.
The earnings were a mixed bag, but the bigger catalyst was the announcement of a leadership change at the Chinese fintech.
Now what
The company announced this week that CEO Feng Zhang has resigned for personal reasons. He will be replaced by Tiezheng Li, who had been vice chairman of the board and president of the company since 2020.
Li is one of FinVolution's co-founders and has served in a variety of roles over the years, including chief strategy officer, chief operating officer, and chief risk officer. From a management standpoint, the transition should be pretty seamless.
Also, FinVolution offered guidance for 2023, calling for full-year transaction volume of 189 billion RMB to 205 billion RMB. That would represent 10% to 20% year-over-year growth. Its international full-year transaction volume guidance is expected to be approximately 6.4 billion RMB, which would be a 50% increase over 2022 levels.
However, as a penny stock, investors should expect volatility, particularly with China's sputtering economy and lingering COVID concerns.
