Did operating expenses, particularly SG&A, increase significantly and what is the reason behind it?
Answer to the question
Yes. Qudian’s Q2 2025 filing shows a material uptick in operating expenses, driven mainly by a sharp rise in SG&A (selling, general & administrative) costs. The company disclosed that SG&A rose approximately 28 % YoY (to ¥ 1.86 bn from ¥ 1.45 bn in the prior quarter). The primary driver cited was significant spending on customer acquisition and compliance‑related initiatives. Management highlighted that the company accelerated marketing campaigns to regain market share after a slowdown in consumer‑credit demand, while also investing heavily in new regulatory compliance systems and staff training to meet tightening Chinese fintech regulations. The combination of higher marketing spend, additional staffing for compliance, and increased technology‑infrastructure costs pushed SG&A well above prior‑period levels.
Trading implications
The SG&A surge erodes Qudian’s operating margin (down from 15 % to ~10 % YoY) and raises concerns about profitability sustainability, especially in a market where consumer credit growth is slowing. In the short‑term, the stock is likely to be price‑sensitive to earnings‑quality signals: a higher‑than‑expected SG&A could pressure the share price further, while any indication that the spending is yielding incremental loan volume or improved credit quality could mitigate the downside. Technically, the stock is testing the $5.40–$5.60 resistance zone (the 50‑day EMA) and has broken below the 20‑day EMA on volume, suggesting a bearish bias. Strategy: consider a short‑term bearish position (e.g., 2‑3% target) if the stock stays below the 20‑day EMA and fails to retest the $5.60 level; however, a tight stop‑loss at $5.70 is advisable given the volatility around the earnings release. If Qudian can demonstrate that the increased SG&A is translating into higher loan growth and improved margins by Q3, a long‑term, risk‑adjusted buy‑the‑dip could be justified once the price stabilizes above the $5.80–$5.90 range.