Is UP Fintech a Buy Under $10?

Online brokerage firm UP Fintech Holding Limited (TIGR), which is headquartered in the Chaoyang District in China, is known as the ‘Robinhood of China,’ enabling investors to trade on multiple exchanges worldwide. The company reported solid revenues for the second quarter, and more than 60% of its newly funded accounts were derived from international markets in the quarter.

However, the stock has lost 57.4% in price over the past three months to close yesterday’s trading session at $7.91. It is currently trading 79.4% below its 52-week high of $38.50, which it hit on February 19, 2021.Furthermore, its losses widened in the second quarter. So, TIGR’s near-term prospects look bleak.

Also, TIGR could face regulatory jeopardy with China's new personal data privacy law taking effect on November 1.

So, here’s what we think could shape TIGR’s performance in the upcoming months:

Top Line Growth Doesn’t Translate into Bottom Line Improvement

For its fiscal second quarter ended June 30, 2021, TIGR’s total revenue surged 98.7% year-over-year to $60.20 million. The company’s total assets increased 121.9% sequentially to $4.86 billion.

However, its total operating costs and expenses for the quarter increased 171% year-over-year to $23.10 million. In comparison, its net loss came in at $21.50 million, compared to $4.40 million in income in the prior-year period. Also, its total liabilities increased 127.4% sequentially to $4.45 billion.

Poor Profitability

In terms of trailing-12-month net income margin, TIGR’s 6.13% is 79.4% lower than the 29.79% industry average. Likewise, its 0.07% trailing-12-month asset turnover ratio is 65.2% lower than the 0.20% industry average. And the stock’s 0.47% trailing-12-month CAPEX/Sales is 72.9% lower than the 1.73% industry average.

Lofty Valuation

In terms of forward P/B, TIGR’s 4.88x is 305.4% higher than the 1.20x industry average. Likewise, its 35.28x forward non-GAAP P/E is 204.7% higher than the 11.58x industry average. Moreover, the stock’s 4.55x P/S is 32.9% higher than the 3.43x industry average.

POWR Ratings Reflect Bleak Prospects

TIGR has an overall D rating, which equates to Sell in our POWR Ratings system. The POWR Ratings are calculated by considering 118 distinct factors, with each factor weighted to an optimal degree. 

Our proprietary rating system also evaluates each stock based on eight distinct categories. TIGR has a D grade for Value, which is in sync with its higher-than-industry valuation ratios.

TIGR has a D grade for Quality, which is in sync with its lower-than-industry profitability ratios. In addition, the stock has an F grade for Stability, consistent with its 1.87  beta.

TIGR is ranked #96 of 103 stocks in the Financial Services (Enterprise) industry. Click here to access TIGR’s ratings for Growth and Momentum as well.

Bottom Line

TIGR is currently trading below its 50-day and 200-day moving averages of $11.87 and $17.78, respectively, indicating that it is in a downtrend. Furthermore, it could keep losing in the near term due to regulatory pressures. So, we think the stock is best avoided now.

How Does UP Fintech (TIGR) Stack Up Against its Peers?

While TIGR has an overall POWR Rating of D, one  might want to consider investing in the following Software - Application stocks with an A (Strong Buy) rating: Forrester Research, Inc. (FORR), CPI Card Group Inc. (PMTS), and Santander Consumer USA Holdings Inc. (SC).

TIGR shares were trading at $7.94 per share on Monday afternoon, up $0.03 (+0.38%). Year-to-date, TIGR has declined 0.00%, versus a 20.71% rise in the benchmark S&P 500 index during the same period.

Nimesh Jaiswal's fervent interest in analyzing and interpreting financial data led him to a career as a financial analyst and journalist. The importance of financial statements in driving a stock’s price is the key approach that he follows while advising investors in his articles.

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