Qudian's Strategic Exit Positions It for a Profitable Comeback: Why Now Is the Time to Invest

The investment landscape is littered with companies that cling to failing ventures, sacrificing shareholder value in the process. Qudian Inc. (QD) is proving to be a rare exception. By decisively exiting its last-mile delivery business—a move that underscores its financial discipline—Qudian has positioned itself to capitalize on undervalued assets, aggressive share repurchases, and a renewed focus on high-margin opportunities. Let's dissect the data and uncover why this pivot creates a compelling investment thesis.

The Exit: A Necessary Pruning of Non-Core Assets

Qudian's decision to wind down its last-mile delivery business, launched in 2022 under the "Fast Horse" brand, was a calculated response to unsustainable competition. The segment's revenue plummeted by 55% in Q1 2025 compared to the same period in 2024, with sales dropping to RMB23.8 million (US$3.3 million). While painful in the short term, this exit eliminates a cash-draining distraction. The company's focus now shifts to its core strengths: leveraging technology to drive profitable ventures.

Note: A declining stock price here would highlight undervaluation, but even stability suggests a buying opportunity.

Cash Is King: The Fuel for Growth and Buybacks

Qudian's financial health remains robust, with RMB4.8 billion (US$664 million) in cash and equivalents as of March 2025. This liquidity buffer is critical for two reasons:
1. Aggressive Share Repurchases: The company has spent US$746 million on buybacks since mid-2024, repurchasing 176 million ADSs at an average price of US$4.2. With shares now trading at depressed levels, this strategy is set to accelerate, boosting EPS and shareholder value.
2. Strategic Reinvestment: Freed from last-mile losses, Qudian can redirect capital to high-potential ventures. Its technology-driven consumer solutions—think AI-powered fintech tools or data analytics—could yield outsized returns.

Non-GAAP Profitability: A Sign of Structural Turnaround

Qudian's Q1 2025 net income surged to RMB150 million (US$20.7 million), a stark reversal from a RMB73.6 million loss in 2024. This turnaround is driven by investment income (up 205% year-over-year) and gains from derivatives, highlighting the company's ability to monetize its capital efficiently. While non-core, these gains signal a shift toward a more diversified revenue model.

A rising trend here would validate the company's financial flexibility.

Why the Long-Term Outlook Is Bright

1. Market Mispricing: Qudian's stock trades at a P/E ratio of 5-7x—far below peers in fintech and tech-driven services. This compression ignores its cash-rich balance sheet and the potential for margin expansion in new ventures.
2. Share Buyback Catalyst: With US$300 million remaining under its repurchase program, every dollar spent reduces shares outstanding, creating a powerful tailwind for EPS growth.
3. New Venture Pipeline: Management has hinted at exploring AI-driven consumer platforms and data solutions. These could tap into Asia's booming digital economy, where Qudian's existing tech infrastructure offers a head start.

Risks and Considerations

• Execution Risk: The success of new ventures hinges on Qudian's ability to innovate in crowded markets.
• Regulatory Scrutiny: Fintech firms in China face compliance challenges, though Qudian's focus on consumer tech may mitigate this.

Final Analysis: A Rare Value Play in Tech

Qudian's exit from last-mile delivery isn't just about cutting losses—it's a strategic reallocation of resources to higher-margin opportunities. With cash reserves to fuel growth and buybacks driving shareholder value, this is a company poised to rebound. At current valuations, investors get a technology powerhouse trading at a fraction of its peers, with a management team proven to act decisively.

Action Item: Accumulate Qudian (QD) while its shares remain undervalued. The combination of financial discipline, robust cash flow, and a clear path to profitability makes this a buy-and-hold opportunity with asymmetric upside.

A visual showing growing cash reserves alongside increasing buybacks would emphasize capital efficiency.

Investors who act now may capture not only short-term gains from buybacks but also long-term appreciation as Qudian's new ventures scale. This is a company rewriting its story—one of strategic retreats and smart offensives.