Secoo Skyrockets 52% on $100 Million Share Sale to New Partner Qudian

Both Secoo and Qudian expect soft financial performances going forward.

Anthony Russo
    Jun 03, 2020 11:25 AM  PT
Secoo Skyrockets 52% on $100 Million Share Sale to New Partner Qudian
author: Anthony Russo   

Shares of Secoo Holding Ltd. (Nasdaq: SECO) surged 52% by midday Wednesday on the news of the Chinese online consumer finance provider Qudian Inc. (Nasdaq: QD) agreeing to purchase up to an aggregate of $100 million in the company on the establishment of a strategic partnership.

Under the agreement, QD will purchase up to 10.2 million shares at 9.20 each, according to statements by both companies today. The deal would make QD the largest shareholder in the authentic upscale products provider, holding around 29% of its issued and outstanding shares.

"This strategic partnership leverages both companies' resources, capabilities, industry expertise and market presence, while fostering collaboration in supply chain management, user acquisition and retention, quality appraisals, post-sales services, and financing solutions," Min Luo, Founder, the chairman, and chief executive officer of Beijing-based QD, said in a statement today.

He added, "Our partnership will bring value to both Secoo and our Wanlimu platform, launched earlier this year, and also establish a good foundation for better user experience for our customers. We believe this strategic investment in Secoo will fuel opportunities for expansion and success on both platforms."

The news also sent QD's stock higher, with shares up nearly 5% from Tuesday's close by midday Wednesday. However, both stocks have been hit hard this year; QD has tumbled 68% year-to-date, while SECO has plummeted 45%.

QD is coming off a rough first quarter, with revenue of $135.3 million on a net loss of $68.7 million, or 27 cents per share. While SECO has yet to report its first-quarter results, the company warned in its fourth-quarter financials that it expects a "soft performance." SECO also said its operations in Europe face uncertainty due to Covid-19. QD is also forecasting a "soft performance" for the second quarter.

The transaction between QD and SECO is expected to be completed in two separate closings soon. For 12 months after the closing, QD may not sell, transfer, or dispose of any of the shares acquired in the agreement.