FinVolution Group just reminded investors that cheap stocks can still hurt. The shares dropped about 15% to US$3.40 after Q2 earnings, even though the company reported revenue of roughly RMB 3.4b and net income of about RMB 442m. That move comes on top of a steep slide over the past month, so the bar heading into this earnings release was already low.

The real flashpoint is not revenue growth. It is pressure on profitability and funding, with trailing net margin sitting near 14.5% and management warning of higher funding costs in China. The rest of this earnings story focuses on how much strain that puts on FinVolution’s low P/E and high dividend yield.

Love FinVolution Group’s low P/E and dividend yield but concerned about funding…