DUO Stock Price Increases 50.52% Over The Past Week: Why It Happened

By Amit Chowdhry ● December 7, 2020
  • The stock price of Fangdd Network Group Ltd (NASDAQ:DUO) increased 50.52% over the past week. This is why it happened.

The stock price of online real estate marketplace Fangdd Network Group Ltd (NASDAQ:DUO) increased 50.52% over the past week. These are several triggers that caused the stock price to increase.

Positive Stock Price Trigger – Q3 2020 Results, November 19

Fangdd Network had reported its Q3 results on November 19. These are some of the highlights:

– Revenue decreased by 13.6% year over year to RMB819.1 million (US$120.6 million) from RMB948.0 million in the same period of 2019

– Net income in the third quarter of 2020 was RMB21.9 million (US$3.2 million) compared to RMB80.3 million in the same period of 2019

– Non-GAAP net income in the Q3 2020 was RMB48.0 million (US$7.1 million) compared to RMB80.3 million in the same period of 2019

– The number of active agents in the company’s marketplace was 276.6 thousand, representing an increase of 22% from 226.8 thousand in the same period of 2019

– The number of closed-loop agents was 26.5 thousand, representing an increase of 28% from 20.7 thousand in the same period of 2019

– Total closed-loop GMV facilitated on the company’s platform increased by 9.4% to RMB55.9 billion (US$8.2 billion) from RMB51.1 billion in the same period of 2019. And new property and resale listings contributed RMB33.0 billion (US$4.9 billion) and RMB22.9 billion (US$3.4 billion), respectively, to the total closed-loop GMV in the third quarter of 2020

– Net income in Q3 2020 was RMB21.9 million (US$3.2 million) compared to RMB80.3 million in the same period of 2019

– Non-GAAP net income in the third quarter of 2020 was RMB48.0 million (US$7.1 million) compared to RMB80.3 million in the same period of 2019

– For Q4 2020, the company expects its revenue to be between RMB600 million and RMB700 million. 

Positive Stock Price Trigger – Partnership With Shanghai Yuancui, November 19

On November 19, Fangdd announced it entered into a share transfer and capital increase agreement with Shanghai Yuancui Information Technology Co., Ltd., a company providing technology-enabled solutions, franchise branding, and operational efficiency improvements for agents and agencies in the real estate brokerage industry. Currently, Shanghai Yuancui has over 400 offline stores. And Centaline (China) Property Agency Limited (a subsidiary of leading real estate brokerage firm Centaline Group) is a shareholder of Shanghai Yuancui.

Positive Stock Price Trigger – Zacks Report, December 2

On December 2, Zacks published a report that was titled: “DUO: Fangdd Valuation is Well Below Peers and Should Improve as Pandemic Related Woes Abate.” In the report, Zacks pointed out that the majority of Fangdd’s revenue comes from commission sharing with agents from the sale of newly built homes and the company receives a small portion of the commission paid by the developer to the agent.

Agents receive a 2% to 3% commission and Fangdd may receive 15% to 20% of that amount. However, Fangdd is working to diversify its revenue streams by adding value-added services like parking space sales and property management services. And the number of new construction property projects on its platform increased to 3,479, growing 11.3% year-over-year and 19.2% sequentially.

Zacks noted that Fangdd should be an “should be an attractive option for micro, small, and medium sized independent agents.” At the time of the article being published Fangdd was trading at an enterprise valuation of US$482 million (1.3 times estimated 2020 sales), which was is a value play compared to its peers that trade at 9.7 times.

Disclaimer: This article is for informational purposes. You should do your own research before making investment decisions.