CNFinance Stock Soars 98% on Reverse Split, Target Hike
Shares rally after a 1-for-10 ADS ratio change and a Greenridge price target upgrade to $20, despite underlying financial headwinds.
Shares of CNFinance Holdings Limited (NYSE: CNF), a financial services provider for small enterprises in China, surged an astonishing 98% in recent trading. The dramatic rally was ignited by a combination of a significant structural change to its American Depositary Shares (ADS) and a massively bullish price target revision from Greenridge.
The primary catalyst was the company's decision to implement an , a move that functions as a 1-for-10 reverse split. This action was taken in response to a notification from the New York Stock Exchange in April after the company's shares traded below the required $1.00 minimum for an extended period. By consolidating its shares, the company is aiming to regain compliance and appeal to a broader range of institutional investors.
Adding fuel to the fire, investment firm Greenridge from $5 to $20 while maintaining a Buy rating. The firm's analysis suggests that CNFinance's strategy of managing its loan portfolio and rebuilding cash reserves positions it favorably for a future recovery in China's property market.
Despite the explosive rally, the company faces significant financial challenges. CNFinance recently reported a net loss of RMB40.4 million for the first half of 2025, a stark contrast to the net income from the prior year, alongside a 55.1% decline in interest and fees income. Furthermore, valuation metrics present a mixed picture, with a low Price-to-Book ratio suggesting potential undervaluation, but a Beneish M-Score of -1.46 indicates , warranting investor caution.
While the technical adjustment and analyst optimism have provided a powerful short-term catalyst, investors will be closely watching whether CNFinance's strategic focus on its niche market of providing home equity loans to micro-enterprises can translate into a fundamental turnaround.