FAST NEWS: Cango Announces Large Special Dividend

The Latest: Car trading platform operator Cango Inc. (CANG.US) announced a one-time special cash dividend of $1 per American depositary share (ADS) on Tuesday after U.S. stock markets closed.

Looking Up: The amount of the dividend equates to 44% of the company’s last closing price. That means any holders of its stock will receive nearly half the value of their holdings through the cash payment set for Nov. 23.

Take Note: The company had about 138 million ADSs outstanding at the end of June, meaning the dividend will cost it about $138 million. That’s more than a quarter of the roughly 3.4 billion yuan ($474 million) in cash and short-term investments the company had at the end of June.

Digging Deeper: Cango is a former car financier that has been transforming into operator of a platform offering a more diversified range of services for car traders, including financing, insurance and purchasing services. It conducts most of its business through its Haoche platform, which launched as a WeChat mini app last year and as a regular app in June. The company is still losing money as it scales up its new business model, including a non-GAAP adjusted net loss of 189.6 million yuan in its latest reporting quarter through June. But it also has a relatively comfortable cash cushion due to big gains from its previous investment in electric vehicle maker Li Auto (LI.US; 2015.HK). The latest announcement comes after Cango made a similar special dividend of $1 per ADS in April. 

Market Reaction: Cango’s ADSs surged 20.8% to $2.73 in Tuesday after-hours trading after the announcement. That price would represent a nearly four-month high if the shares maintain those gains in regular Wednesday trade.

Reporting by Doug Young

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