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The Problem with Qudian Stock


๐—ง๐—ต๐—ฒ ๐—ฃ๐—ฟ๐—ผ๐—ฏ๐—น๐—ฒ๐—บ ๐˜„๐—ถ๐˜๐—ต ๐—ค๐˜‚๐—ฑ๐—ถ๐—ฎ๐—ป ๐—ฆ๐˜๐—ผ๐—ฐ๐—ธ


๐Ÿฆ˜ Qudian Stock $QD lost 40% in the last year, before gaining 200%, then losing 40% again. Over the long-term, Qudian is in a deep bear market. Normally, this should not worry value investors since ๐™ซ๐™ค๐™ก๐™–๐™ฉ๐™ž๐™ก๐™ž๐™ฉ๐™ฎ ๐™ž๐™จ ๐™ฃ๐™ค๐™ฉ ๐™ง๐™ž๐™จ๐™ . The stock is selling at 0.25X book value today and looks like a deep value stock but is it really that safe?


๐Ÿ“‰ Qudian recently reported 4th quarter earnings. Revenues were down 58% in 2020 compared to 2019 and net income down 70%. There were lower economic activities and more regulations to explain this. But the good news is that the recovery is happening, the delinquency rate is falling and is now even below its 4Q19 level. However, we need to acknowledge that they are now being more choosy in their loans. This means ๐™ก๐™š๐™จ๐™จ ๐™ง๐™š๐™ซ๐™š๐™ฃ๐™ช๐™š๐™จ ๐™–๐™ฃ๐™™ ๐™ฅ๐™ง๐™ค๐™›๐™ž๐™ฉ๐™จ ๐™›๐™ค๐™ง ๐™ฉ๐™๐™š ๐™˜๐™ค๐™ข๐™ฅ๐™–๐™ฃ๐™ฎ ๐™ž๐™ฃ ๐™ฉ๐™๐™š ๐™˜๐™ค๐™ข๐™ž๐™ฃ๐™œ ๐™ฎ๐™š๐™–๐™ง๐™จ.


๐Ÿ’ฐ Qudian maintains a ๐™œ๐™ง๐™š๐™–๐™ฉ ๐™—๐™–๐™ก๐™–๐™ฃ๐™˜๐™š ๐™จ๐™๐™š๐™š๐™ฉ, they were able to buyback shares in 2020 and also bought back much of their debt. I've mentioned before that Qudian is trying to do something like Berkshire Hathaway $BRK.B , using their cash to buy other businesses. But most of these businesses are failures for now.


๐Ÿšฌ Qudian doesn't look like a stock in which Warren Buffett will invest in but it looks like a stock in which Warren Buffett would invest in but it certainly looks like a stock in which Benjamin Graham would invest in (although he was very sceptical of foreign securities in his times). ๐™Œ๐™ช๐™™๐™ž๐™–๐™ฃ ๐™ž๐™จ ๐™– ๐™˜๐™ž๐™œ๐™–๐™ง ๐™—๐™ช๐™ฉ๐™ฉ ๐™จ๐™ฉ๐™ค๐™˜๐™ .


๐Ÿš€ Qudian is not only trading under its book value but also under its net current asset value (current asset minus total liabilities). This doesn't mean that the market will eventually realize that Qudian is undervalued. Maybe it will forever remain at 0.25X book value. ๐™๐™๐™š ๐™˜๐™ค๐™ข๐™ฅ๐™–๐™ฃ๐™ฎ ๐™ก๐™–๐™˜๐™ ๐™จ ๐™˜๐™–๐™ฉ๐™–๐™ก๐™ฎ๐™จ๐™ฉ๐™จ ๐™›๐™ค๐™ง ๐™ฉ๐™๐™š ๐™›๐™ช๐™ฉ๐™ช๐™ง๐™š.


Qudian is still a good investment at current price but without new catalysts, the price will not go up. Therefore, you need to make sure you ๐™ฅ๐™ง๐™ค๐™ฉ๐™š๐™˜๐™ฉ ๐™ฎ๐™ค๐™ช๐™ง ๐™™๐™ค๐™ฌ๐™ฃ๐™จ๐™ž๐™™๐™š, you need to know when to take profits on the stock.


Watch the full video on YouTube:

https://www.youtube.com/watch?v=7lh1j-5F57w&list=UUPO3uUyoXSaFWG-Ldq1mqEQ&index=2


Full analysis of Qudian:

https://ishfaaqpeerally.teachable.com/courses/662813/lectures/31521729



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