LexinFintech Holdings Ltd

LexinFintech Holdings Ltd (NASDAQ: LX) primarily operates in the consumer finance technology sector. The company leverages technologies such as artificial intelligence and big data to develop an online system for risk assessment and management, driven by quantitative decision-making processes.

Positive Growth Prospects

• Profitability Rebound
  LexinFintech experienced a strong rebound in profitability during Q4 2024, reporting net income of RMB363 million — an increase of 17% quarter-over-quarter and over 100% year-over-year. For the full year, net income reached RMB1.1 billion, reflecting a 3.2% year-over-year increase despite macroeconomic challenges. Notably, the net income take rate improved to 1.31%, up from 1.09% in the previous quarter, highlighting greater efficiency in generating profit relative to loan exposure.
• Solid Margin Improvement
  The company achieved significant margin expansion driven by several key factors: an improved take rate, a 24.6% year-over-year reduction in funding costs in Q4, and continued operational efficiency gains. Gross profit for the full year grew by 11.4% — outpacing the 8.8% growth in total revenue — indicating effective cost management and profitability leverage within the business model.
• Tech-Empowerment Segment Growth
  Lexin’s tech-empowerment business delivered standout growth, with Q4 revenue climbing 41% year-over-year to RMB602 million and full-year revenue rising 14.7% to RMB1.88 billion. This reflects increasing adoption of Lexin’s Intelligent Credit Platform (ICP) and the company’s success in diversifying beyond its traditional loan facilitation business, positioning technology services as a key pillar of future growth.
• Asset Quality Trends Positive
  Asset quality metrics improved during Q4 2024. The 90+ days past due (DPD) ratio declined slightly from 3.7% in Q3 to 3.6%, suggesting better portfolio performance. Additionally, the first payment default rate remained below 1%, underscoring the effectiveness of Lexin’s underwriting enhancements and risk management practices.

Growth Challenges

• Loan Origination and Outstanding Balance Declines
  Lexin reported a notable contraction in loan volumes, with Q4 originations down 15.2% year-over-year to RMB52 billion, and full-year originations falling 15% to RMB212 billion. Outstanding loan balances also dropped 11.1% year-over-year to RMB110 billion. The company attributed this decline to macroeconomic headwinds and a strategic pivot toward profitability over growth, but the trend also points to softer demand or tightened credit standards.
• Decline in Active Borrowers
  The number of active loan users for the full year 2024 fell to 8.2 million, a 4.3% year-over-year decrease. This downward trend could constrain future growth if not offset by increased average loan sizes or greater monetization per user. Sustained declines in borrower activity may also reflect changing borrower behavior or heightened competitive pressures.
• E-Commerce Business Shrinkage
  Lexin’s e-commerce platform continued to shrink, with gross merchandise volume (GMV) in Q4 falling 25% year-over-year to RMB969 million, and full-year GMV dropping 31.3% to RMB3.63 billion. Revenue from the segment declined 24.5% year-over-year. The company appears to be strategically de-emphasizing this line of business, which may also be suffering from weak consumer demand.
• Elevated Provisioning and Derivatives Losses
  Provisioning levels remained high, with full-year provisions for guarantee liabilities rising to RMB3.66 billion, up from RMB3.2 billion in 2023. Additionally, Lexin recorded a significant increase in derivatives-related losses, with fair value losses from financial instruments totaling RMB979 million for the year — a sharp rise from RMB206 million in the prior year. These elevated risk costs are absorbing a portion of the company’s operational gains.
• Adjusted Net Income Decline
  While GAAP net income grew, adjusted net income — which excludes certain one-time items — fell 19% year-over-year to RMB1.20 billion. This suggests that the reported profit increase may be partially driven by temporary or non-recurring items, and that the core profitability performance, after normalization, was weaker than headline figures indicate.

Technical Observation (on the daily chart):

LexinFintech Holdings (LX) has been in an uptrend from November 2024 to March 2025, but has since pulled back and is consolidating. The 21-day moving average has recently crossed below the 50-day moving average, signaling a short-term bearish bias. The RSI is neutral, indicating no extreme overbought or oversold conditions. Volume has decreased, suggesting waning momentum

LexinFintech's Q4 and full-year 2024 results reflect a mixed performance. On the positive side, the company delivered a strong rebound in profitability, improved margins, and continued growth in its tech-empowerment segment, supported by stable asset quality and a more generous dividend policy. However, these gains were tempered by declines in loan originations, active borrowers, and e-commerce revenues, as well as elevated provisioning and derivatives losses. While Lexin is clearly prioritizing profitability and operational efficiency, the contraction in core lending activity and adjusted net income signals challenges to sustaining growth momentum. 

As per the above-mentioned price action, recent key business and financial updates, momentum in the stock over the last month, and technical indicators analysis, a ‘Watch’ rating has been given to LexinFintech Holdings Ltd (NASDAQ: LX) at the current market price of USD 8.35 as of May 07,2025 at 08:40 AM PDT. 

Individuals can evaluate the stock based on the support and resistance levels provided in the report in case of keen interest taking into consideration the risk-reward scenario. 

Markets are trading in a highly volatile zone currently due to certain macro-economic issues and prevailing geopolitical tensions. Therefore, it is prudent to follow a cautious approach while investing.

Related Risk: This report may be looked at from a high-risk perspective and a recommendation is provided for a short duration. This report is solely based on technical parameters, and the fundamental performance of the stocks has not been considered in the decision-making process. Other factors which could impact the stock prices include market risks, regulatory risks, interest rates risks, currency risks, social and political instability risks etc. 

Note 1: Past performance is not a reliable indicator of future performance.

Note 2: The reference date for all price data, currency, technical indicators, support, and resistance level is May 07,2025. The reference data in this report has been partly sourced from REFINITIV.

Note 3: Investment decisions should be made depending on an individual's appetite for upside potential, risks, holding duration, and any previous holdings. An 'Exit' from the stock can be considered if the Target Price mentioned as per the Valuation and or the technical levels provided has been achieved and is subject to the factors discussed above.

Note 4: Target Price refers to a price level that the stock is expected to reach as per the relative valuation method and or technical analysis taking into consideration both short-term and long-term scenarios.

Note 5: ‘Kalkine reports are prepared based on the stock prices captured either from the New York Stock Exchange (NYSE), NASDAQ Capital Markets (NASDAQ), and or REFINITIV. Typically, all sources (NYSE, NASDAQ, or REFINITIV) may reflect stock prices with a delay which could be a lag of 15-20 minutes. There can be no assurance that future results or events will be consistent with the information provided in the report. The information is subject to change without any prior notice.