SOS Sells P2P Operations in Final Farewell to Stuggling Lending Business
With the health of the stock at stake, the company formerly known as China Rapid Finance Ltd completed an "asset injection" with Yao Bao Two Ltd., the parent of SOS Information Technology in late July.
The "new" company, trading under the symbol (NYSE: SOS), now focuses on the health and emergency services sector. Specifically, it provides marketing-related data, technology, and solutions to emergency healthcare services in China.
Today, shares soared nearly 5% to $2.26 per American depositary share after announcing that it has completed the sale of its peer-to-peer (P2P) lending operations, finally shedding the remains of the legacy business of China Rapid after new Chinese regulations rapidly sent the former company, and stock, into decline.
The big data research and developer reiterated P2P lending troubles in China on the sale announcement, saying in a statement that "recent government regulations" in China have given peer-to-peer firms limited opportunity to grow."
The Qingdao-based company is not the only one in the space that has made efforts to transition away from the Chinese P2P sector. Golden Bull Ltd. (Nasdaq: DNJR) and Jiayin Group (JFIN) have done similarly.
Long before Covid-19, Chinese regulators have been forcing firms operating in the industry to go out of business. Since the crackdown began in 2016, nearly 5,000 firms have fled the P2P sector, as Caixin Global reported in April. As of March, the number of P2P firms operating in the sector had tumbled to 139, representing a fall of 86% from the start of 2019, the report said.
Proceeds from the sale towards its working capital and general corporate purposes.
"The legacy P2P business needed to be disposed of so that we are able to focus all our energy on realizing our vision to become a leader in the health and emergency services industry in China," Yandai Wang, the chairman of SOS, said in a statement today.
He added, "We are excited about what the future will bring."
The company last reported $32.5 million in revenue, down 43% year-over-year in its third-quarter financials. Net loss narrowed to $22.8 million, or 34 cents per share, compared with $51.8 million, or 79 cents per share.
Shares of SOS are down nearly 39% year-to-date.