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Weidai Ltd (WEI) stock soared in the pre market trading session: here’s why

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Weidai Ltd (WEI) stock recently traded at $1.41 which is a 2.76% downward movement. The WEI stock previously closed at $1.41. WEI stock also soared in the pre-market trading session by 39.72% at the time of writing.

The recent pattern of positive movement in the after-hours trading session does not come along with any recent relevant news or press release.

Weidai Ltd provides credit to its clients

Weidai Ltd. is a software-application based company that specifically provides risk management system and financing solution services. In China, it is considered the pioneer for service provision of its kind. Weidai Ltd. provides auto-backed financing solutions to its clients. WEI does it through giving small and micro enterprises in China an option to give their old and used automobiles as “non-standard” collateral for WEI stock to use as an investable assets and then provide credit. The company also provides connections to borrowers with institutional funding partners through its platform.

Announcement of Full Year 2020’s financial result

Weidai Ltd. announced the release of its financial results for its full-year 2020 report, on 19 March 2021. The financial results were not reviewed by the WEI’s independent registered accounting firm.

The auto-backed financing solution provider has stated that its loan balance for the year 2020 till the end of 31 December 2020 was RMB4.5 billion which is equivalent to $0.7 billion which is a drastic drop from RMB13.7 billion in 2019.

NOTE: All conversions of RMB to US is based on the noon buying rate on 31 December 2020 as set forth by U.S Federal Reserve Board – RMB6.5250 to US$1.0

Furthermore, the provision for loans and advances as of 2020 was RMB803.7(US$235.4) compared to RMB1162 in 2019.

WEI stock’s Full Year 2020’s net revenue totals at RMB1536.1 million(US$235.4 million) compared to RMB3375 million in 2019. Breaking these net revenues down, we gather that 2020’s;

  • loan service fee for 2020 is RMB 1,411.1 million(US$216.3 million)as compared to RMB2,955 million in 2019
  • Other revenues in WEI for 2020 was RMB97.8 million (US$15 million)as compared to RMB273.4 million in 2019
  • Net financing income in 2020 was RMB30.8 million (US$4.7 million)compared to RMB144.8 million in 2019

Operating costs and expenses of the WEI stock are at a total RMB 1,141 million(US$174.9 million) compared to RMB1909.5 million. Among these costs are;

  • Provision for financial guarantee liabilities in 2020 was RMB 103.0 million(US$123.2 million) – RMB19.2 million in 2019
  • Expenses for originating and servicing were at RMB766.3 million(US$15.8 million) – RMB1388.6 million in 2019
  • Sales and Marketing expenses for 2020 were RMB15.1 million(US$117.4 million) – RMB138.1 million in 2019
  • Research and Development expenses for 2020 were RMB27.1 million(US$4.2 million) – RMB81.7 million in 2019

FY 2020 also shows that share based compensation expenses in 2020 were RMB 6.1 million(US$0.9 million).

WEI stock has reported a net loss in 2020 of RMB714.3 million(US$109.5 million) as compared to the net income in 2019 of RMB263.2 million. Furthermore, the ordinary shareholders of the WEI stock also had a net and comprehensive loss of RMB712.6 million(US$109.2 million). In 2019 the ordinary shareholders had gained RMB253.6 million.

SEC regulatory involvement in Weidai Ltd

Along with the financial report Weidai Ltd. has also reported that it is cooperating fully with SEC and government authority for the smooth peer-to-peer exit. Since the regulatory guidance issued by the PRC government in 2019, the guidance states the full exiting of the peer-to-peer industry. This is done in order for the transformation of online lending information intermediary institutions into pilot micro credit companies.

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