Photographer: Eric Thayer/Bloomberg

Chinese Company Delays Purchase of Nasdaq Stock That Jumped 4,500%

Updated on
  • Wins shares plunge in New York, after dropping 20% Thursday
  • Freeman FinTech says it needs more time for deal update

Wins Finance Holdings Inc., the Chinese loan guarantor that rode a mysterious 4,500 percent stock surge, plunged for a second day after a potential buyer said it needed more time to brief shareholders on the deal.

Wins lost almost half, or $2.7 billion, of its market value during the two-day slide that began after Bloomberg News reported on the puzzling gain in the company’s stock. The shares tumbled 35 percent to close at $144.99 in New York, following a 20 percent drop on Thursday. Wins is now worth less than $3 billion, and is no longer the best performer in the Nasdaq Composite Index over the past year.

Freeman FinTech Corp., the Hong Kong-based financial-services company that signed a deal in December to buy a majority stake in Wins at a massive discount, now expects to release more details on or before April 30, according to a statement Friday. That’s a month later than it previously expected and is the second time Freeman has delayed the release of information. Wins has said that the acquisition is still being evaluated by the Hong Kong Stock Exchange.

Wins’s majority shareholder, Wang Hong, agreed in December to sell his 67 percent stake for $19.35 a share, a 79 percent discount to where the company was trading the day before he signed the deal. Those shares, which were valued at $3.8 billion the day before the Bloomberg report, are now worth $1.9 billion. If the transaction is completed, Wins would become a subsidiary of Freeman.

Stock Surge

The shares had soared as much as 4,555 percent since debuting on Nasdaq in 2015. The firm’s market value surpassed $9 billion in February, about four times as much as LendingClub Corp., an online lender with 50 times the revenue. Wins said in a statement that it had no idea what drove the surge in its stock.

Ten former Freeman FinTech directors face possible sanctions by the local regulator over a failed 2011 deal that cost the firm HK$76.8 million ($9.9 million). Chairman Zhang Yongdong, who was censured by China’s market regulator in 2015 for allegedly manipulating shares of a different company, resigned from his role at Freeman in January, after the Hong Kong Stock Exchange said he was unfit to serve as a director. Zhang now holds the title of honorary chairman.

(Updates share price in second paragraph.)
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