Qudian Poised to be Significant US IPO

Microlenders aren’t exactly new; places where users who need a little extra cash one week to get over an unexpected bill or the like fill a useful purpose and are paid handsomely—perhaps too handsomely—for their service are increasingly popular. One such microlender, Qudian, is poised to offer up an initial public offering (IPO) of stock in the United States, and it may well make one of the biggest such splashes around.

Qudian’s set to price its IPO at $24 a share, which would put its valuation at $900 million US, roughly. Given that the company currently has 47.9 million registered users, and 5.6 million active borrowers, that may not be such an unduly high valuation.

Moreover, Qudian’s target market is the young consumer, offering short-term consumer grade loans. Given the average millennial these days, it’s a safe bet that short-term consumer loans could be a hot property, making Qudian potentially a very big deal. Since it’s a digital-only platform, it can cut down some of its overhead.

When it says “short-term,” it means it, too; the average loan is approved in a matter of seconds, using a combination of data collected from customers and machine learning principles. Loan sizes tend to be small, an average of $136 to $184. Tiny loans, yes, but enough in one place can add up; Qudian reported profit of $143.6 million for just the first half of 2017.

What’s more, Qudian enjoys some impressive backing; Ant Financial, who runs Alipay, is actually one of the company’s biggest current shareholders. Loans from Qudian are actually paid into Alipay accounts, and can be repaid using the same account.

On the surface, the idea is a sound enough one; those needing a quick shot of cash to pay an unexpected bill—a report from earlier this year said that 57 percent of Americans couldn’t handle a $500 surprise expense without going into debt—can get that shot of cash with comparatively little impact. Granted, that means going into debt, but it’s clear that there’s a market for these kinds of low-dollar, short-term loans.

Any time you can meet a market need, you’ve got a marketable product. A marketable product should mean a successful IPO, so look for this mobile-only lender to clean up when it goes live.