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Key Takeaways:
Legacy Mainland China clients still accounted for more than 20% of UP Fintech's first quarter revenue, despite years of efforts to expand internationally
Now based in Singapore after relocating from its original home in Beijing, the online brokerage faces a key challenge in appealing to clients with no Chinese ties
By Warren Yang
UP Fintech Holding Ltd. (NASDAQ:TIGR) has finally put three years of regulatory turbulence in China behind it, but it isn't clear skies for the online brokerage just yet. Now completely severed from its original home market, the company faces a high-stakes race to prove it can grow on foreign soil, especially beyond its core base of users with Chinese backgrounds.
UP Fintech's latest quarterly results, released last week, are a bit of a mixed bag that show both promising signs and challenges for the company in its new 2.0 era.
Firstly, the elephant in the room. The company was fined 411.2 million yuan ($60 million) by the China Securities Regulatory Commission (CSRC) last month for operating an unlicensed business allowing Mainland-based traders to buy stocks in overseas markets like the U.S. and Hong Kong. This dragged its bottom line into the red, as the company, best known for its Tiger Brokers online trading platform, booked a net loss of $26.9 million in the first quarter.
This financial wound is deep, for sure. But it's also conclusive, ending several years of uncertainty for the company. With a multi-year existential threat from Chinese regulators now in the past as a fixed, nonrecurring charge, the company can finally move forward without worrying about the potential for more problems on the Mainland.
"We have fully accounted for this amount in our first quarter results," UP Fintech CFO John Zeng said on the company's earnings call with analysts, referring to the CSRC fine. "This is a one-time nonrecurring charge and will not have a material impact on our core business and overall financial health."
The CSRS also mandated that UP Fintech and rival Futu (FUTU.US) must wind down their original Mainland businesses. That means the pair now have no choice but to go global.
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