FAST NEWS: Cango announces new $50 million share buyback
The Latest: Car-trading platform operator Cango Inc. (CANG.US) announced a plan last Friday to buy back up to $50 million worth of its American depositary shares (ADSs).
Looking Up: The announcement comes after the expiration of a similar $50 million repurchase plan launched a year earlier. Cango only ended up buying back $5.7 million under that plan, meaning the program cost it relatively little despite the much larger size of the authorization.
Take Note: Cango is rapidly burning cash as it transforms from its previous business model as a car financier to a provider of services for new and used car trading. Thus, some might say it should conserve its cash to keep funding its operations until it becomes profitable again.
Digging Deeper: Cango begin its life as a car financier, but two years ago began a transformation to operating a platform for car-trading services. It currently offers such services on its Haoche app for new cars, and its U-Car platform for used cars. The company’s annual report released on Wednesday in the U.S. shows Cango lost 1.1 billion yuan ($159 million) in 2022, up sharply from a 8.5 million yuan loss a year earlier. The company had 2.32 billion yuan in cash, cash equivalents and short-term investments at the end of last year, compared with 4.03 billion yuan a year earlier.
Market Reaction: Cango’s shares rose as much as 7.8% the day of the announcement last Friday, and closed up 2.6%. But the stock has given back all of the gains since then, and currently trades near the lower end of its 52-week range.
Reporting by Doug Young
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