The shares of Danke Apartment, one of China’s biggest rental platforms, surged by more than 75% on Tuesday night, Beijing time, closing at $2.40, mainly due to the rumor that another leading rental specialist 5i5j will purchase Danke.
5i5j did not directly deny the rumor while stating that there has been no official announcement yet, according to Beijing-based blockchain finance media Cailianshe.
Established in January 2015 and run by Phoenix Tree Holdings Ltd., Danke became the first China concept stock in 2020 to list on the New York Stock Exchange (NYSE), raising $149 million. But the company soon found itself in constant financial troubles.
As the Covid-19 pandemic swept China, Danke published a policy that required landlords to give tenants one-month free rent. The policy, however, was enforced without permission of the landlords.
Back in August, Danke had been rumored to misappropriate 600 million yuan in a government project in Jiangsu Province but later the rental platform claimed that “everything was in compliance with laws and regulations.”
Moreover, since September, the rumor of Danke’s bankruptcy has been on and off and cases have been reported that Danke owed employees months of salary. On Nov. 9, a crowd consisting of hundreds of people including tenants, landlords, suppliers, and cleaning staff gathered at Danke headquarters in Beijing to protest and advocate for their rights.
“The landlord knocked on my door on Nov. 15, saying that he would change the lock if he didn’t receive the rent by Nov. 26,” Olivia Xu told Pandaily about her problematic lease with Danke.
Olivia Xu is a university student interning in Beijing, and was one of many who paid rent but the property owners received nothing.
She recalled that she rented the apartment online while she was still in Tianjin and paid off her six-month lease in order to enjoy Danke’s policy for two-months of free rent.
“I was shocked when the landlord came to the apartment and claimed that he hadn’t received the rent for September and November,” Xu recalled. She also mentioned that she couldn’t reach the “housekeeper” via WeChat or phone, who was responsible for helping the tenant communicate with Danke and the landlord.
According to Danke’s previous prospectus, about 67.9% of the platform’s tenants use rental loans. Hence, Danke’s getaway is highly likely to have some continue to repay loans while others will be evicted from their rented rooms.
The share price of Danke has plunged from about $13 per share when it debuted in New York to $1.37 per share on Nov. 16. However, it bounced back and soared as much as 75% on Nov. 17.