China Rapid Finance Could Stumble With Lockup Expiration

October 25, 2017 concludes the 180-day lockup period on China Rapid Finance Limited (NYSE:XRF). When the lockup period ends for XRF, its pre-IPO shareholders, directors and executives will finally be able to sell their more than 39 million previously restricted shares. Just 10 million shares are currently trading.

(Source S1/A)

We believe that there’s a high probability that they will sell at least a portion of these previously restricted shares – XRF has a return from IPO of 74.3%. The potential for a sudden increase in stock available in the open market may cause a short-term decrease in the price of China Rapid Finance shares.

XRF’s pre-IPO shareholders and insiders include numerous corporate entities, trusts, and individuals.

(Source: S-1/A)

Currently, XRF trades in the $9.50 to $10.00 range, above its IPO price of $6.00 and higher than its first day closing price of $6.40 on April 28, 2017.

Business Overview: Consumer Lender in China

China Rapid Finance Limited operates a consumer lending marketplace in the People’s Republic of China. XRF offers a variety of loan products to meet the credit needs of its emerging middle-class made up of mobile adept consumers. The technology-based platform facilitates loans between investors and borrowers, which gives borrowers access to credit and investors attractive returns. Through its subsidiaries, China Rapid Finance provides consumption loans with terms from two weeks to three months. Lifestyle loans have terms from three months to three years. In addition, China Rapid Finance participates in the micro-lending segment. The company serves its investors and borrowers primarily online, although it also has a physical network of 107 data verification centers. Through August 2017, the company had made close to 20 million loans to approximately 2.7 million borrowers. The company was formerly known as China Risk Finance LLC and changed its name to China Rapid Finance Limited in August 2015. China Rapid Finance Limited was founded in 2004 and is headquartered in Shanghai, the People’s Republic of China.