Chaoyang District, China-based online brokerage services provider UP Fintech Holding Limited (TIGR - Get Rating) operates a brokerage platform that allows investors to trade stocks, options, warrants, and other financial instruments that can be accessed through its APP and website. The company added 61,400 funded accounts in the fourth quarter and 414,700 for its fiscal year 2021. Its total number of funded accounts at the end of the year was 673,400.  And its total client assets increased by 7% year-over-year to $17.10 billion in the fourth quarter but have declined 17% from the third quarter of 2021.

TIGR’s shares have advanced 15.3% in price year-to-date and 25.2% over the past month to close yesterday’s trading session at $5.66. Chinese regulators’ latest move–showing Beijing’s willingness to resolve a long-running Sino-U.S. audit stand-off that has put Chinese companies at the risk of being kicked off American stock exchanges–supported the run-up.

However, TIGR is still grappling with growing regulatory pressure at home. Chinese officials announced their plans to ban online brokerages such as Futu Holdings Ltd (FUTU) and TIGR from offering offshore trading services to mainland clients. This is aligned with a broad regulatory crackdown in China that has affected a range of sectors over the past year. Furthermore, these two companies have been in the crosshairs of Sun Tianqi, head of the Chinese central bank’s Financial Stability Bureau, who has repeatedly charged that the two firms are “conducting illegal financial activities.” TIGR stock has slumped 60.4% over the past year and 45.3% over the past six months.

Here is what could shape TIGR’s performance in the near term:

Weak Bottom Line

For the fiscal fourth quarter, ended Dec. 31, 2021, TIGR’s total net revenues increased 36.1% year-over-year to $58.36 million. However, its net income was negative $5.38 million, compared to its $8.49 million year-ago value, while its total comprehensive income stood at a negative $3.86 million, compared to $11.57 million in the prior-year quarter. The company’s net income per ADS declined 161% year-over-year to negative $0.04 and broke even on an adjusted basis.

Lofty Valuation

In terms of forward P/E, TIGR is currently trading at 33.69x, which is 188.4% higher than the 11.68x industry average. Its 1.78 forward Price/Book ratio is 51.4% higher than the 1.18 industry average. TIGR’s 3.32x forward Price/Sales compares with the 3.29x industry average.

Lower-than-industry Margins

TIGR’s 5.97% net income margin is 80.5% lower than the 30.56% industry average. Also, its 0.40% Capex/Sales is 74.7% lower than 1.57% industry average.

TIGR’s 4.31% and 0.44% respective ROE and ROA are 66.3% and 67% lower than the 12.77% and 1.34% industry averages.

Unfavorable POWR Ratings

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

The stock has an F grade for Stability, which is consistent with its 24-month beta of 2.23

TIGR has a C grade for Momentum. This is justified because the stock is trading above its 50-day moving average but below its 200-day moving average.

Of the 110 stocks in the D-rated  Financial Services (Enterprise) industry, TIGR is ranked #103.

Beyond what I have stated above, you can also view TIGR’s grades for Sentiment, Growth, Value, and Quality here.

View the top-rated stocks in the Financial Services (Enterprise) industry here.

Bottom Line

The company is currently focusing on its international expansion strategy and enhancing its fintech platform. TIGR has been signing up new clients overseas to remain afloat amid the Chinese regulatory pressure. But this is costing TIGR heavily, leading to its payroll and branding costs climbing by some 80% in the fourth quarter versus the prior year. Furthermore, even with the substantial investment in attracting new clients, the pace of growth has slowed dramatically. The regulatory crackdowns could make it difficult for TIGR to maintain its momentum in the near term.

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

While TIGR has an overall POWR D Rating, one might want to consider investing in the following Financial Services (Enterprise) stocks with an A (Strong Buy) rating: Forrester Research, Inc. (FORR - Get Rating) and Consumer Portfolio Services, Inc. (CPSS - Get Rating).

TIGR shares rose $0.02 (+0.35%) in premarket trading Wednesday. Year-to-date, TIGR has gained 15.27%, versus a -2.52% rise in the benchmark S&P 500 index during the same period.

About the Author: Subhasree Kar

Subhasree’s keen interest in financial instruments led her to pursue a career as an investment analyst. After earning a Master’s degree in Economics, she gained knowledge of equity research and portfolio management at Finlatics. More...

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