Hexindai Soars 252% on Launching Social E-commerce Platform

Hexindai trades over $130 million worth of stock as it attempts to reinvent itself. Average day? About $90,000.

Author: Belinda Zhou   

Consumer lending marketplace and former peer-to-peer lender, Hexindai Inc. (Nasdaq: HX), surprised the market on Thursday, ranking as the top gainer with a three-digit jump.

The news came that the Beijing-based company announced it has launched a social e-commerce mobile app, Xiaobai Maimai. 

"We believe social e-commerce has enormous growth potential as consumer behavior increasingly shifts from offline to online purchases and demand grows from China's emerging middle class," Xiaobo An, the chief executive officer of Hexindai, said in the statement.

A spokesperson for the company recently told CapitalWatch that the e-commerce strategy will contribute to Hexindai's transformation and long-term development. The company had no choice but to reinvent itself after, like so many other peer-to-peer lending companies, its core business was shut down in what many in the industry see as an overzealous sector-wide crackdown by the Chinese government. Will investors buy the reinvention long-term?

The social e-commerce app offers household goods, food and drinks, and luxury categories. Users can purchase, share or recommend the products to earn commission through its membership rating system. The combination of social experiences and online shopping experiences mirrors Pinduoduo Inc. (Nasdaq: PDD).

Its transaction volume skyrocketed to over 122 million shares on Thursday, in comparison with an average volume of 86,133.

Investors at Investorshub questioned intraday Thursday whether it will be another Shopify (NYSE: SHOP). Or is this just long-awaited news offering a rationale to buy and sell the stock?

Bullish reports said that Wall Street analysts gave a consensus price target for the stock at $3, representing a 131% potential growth from its today's close price of $1.3 per share, according to Marketing Sentinel.

Struggling company Hexindai has been confronted with a challenging environment especially since a short report in January 2019. An activist short-seller, Bonitas Research LLC, alleged that the Chinese lender overstated its business operations to attract capital from U.S. investors; money, it then paid out to insiders. 

Hexindai reported in September that revenue dropped to $4.9 million in the three months through June, down 91% year-over-year. Then the company received a notice to maintain its minimum bid price of $1 per share in December. 

The company had delayed its earnings release for the first fiscal half of 2020 because its personnel remained unable to resume work due to coronavirus-related travel restrictions.

As of March, the company is backed by 11 institutions that hold shares in the company, among which Renaissance Technologies, LLC  held $449,465.

Shares in Hexindai closed at $1.3 per share, up 171% on Thursday.