On Wednesday, Citi updated its stance on UP Fintech Holding Ltd. (NASDAQ: TIGR), commonly known as Tiger Broker, by lowering the stock price target to $6.22 from the previous $8.01. Despite the reduction, the firm has maintained its Buy rating on the stock.
The revision follows UP Fintech's fourth-quarter report, which revealed a significant decline in non-GAAP net profit. The online brokerage firm posted a non-GAAP net profit of $1.06 million for the quarter, marking a 93% decrease from the previous quarter and a 77% drop year-over-year. The full-year non-GAAP net profit for 2023 reached $42.7 million, falling short of Citi's expectations by approximately 5%.
The disappointing earnings for the fourth quarter were largely attributed to a decrease in trading volume and a one-time foreign exchange loss of $7 million, which was a result of the U.S. dollar's depreciation in the last quarter of 2023. This loss contrasted with a foreign exchange gain of $2 million in the third quarter of the same year.
Moreover, UP Fintech's operating profit, excluding share-based compensation, saw a steep decline. The operating profit fell 64% quarter-over-quarter and 51% year-over-year to $4.4 million. The drop was partly due to increased operational expenses, which typically rise in the fourth quarter because of the booking of certain professional services fees.
Despite these setbacks, UP Fintech reported some positive developments. The company added 39.1 thousand new paying customers in the fourth quarter, bringing the total for 2023 to 123.1 thousand. This figure surpassed the management's guidance of 100 thousand by 23.1%.
Looking ahead, UP Fintech has set a target to acquire 150 thousand new paying customers in 2024, which would represent a 50% increase year-over-year.
Citi's decision to adjust the discounted cash flow-derived price target to $6.22 comes after the firm took into account the revised earnings. The firm continues to endorse a Buy/High Risk rating for UP Fintech Holding Ltd.
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