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Waterdrop, Inc. ADR Class A (WDH)
:WDH
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Waterdrop (WDH) AI Stock Analysis

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WDH

Waterdrop

(NYSE:WDH)

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Outperform 70 (OpenAI - 4o)
Rating:70Outperform
Price Target:
$2.00
▲(10.50% Upside)
Waterdrop's overall stock score reflects strong earnings call results and solid valuation metrics, offset by challenges in cash flow management and neutral technical indicators. The company's strategic focus on AI and shareholder returns are significant positives.

Waterdrop (WDH) vs. SPDR S&P 500 ETF (SPY)

Waterdrop Business Overview & Revenue Model

Company DescriptionWaterdrop (WDH) is a leading technology-driven platform focused on providing innovative water solutions. The company operates primarily in the water purification and beverage sectors, specializing in micro-drinking products and related services. Waterdrop is known for its compact water filters and flavoring drops, which enhance the drinking experience while promoting hydration. Its mission is to improve access to clean and healthy drinking water while reducing plastic waste through sustainable practices.
How the Company Makes MoneyWaterdrop generates revenue through multiple channels, including the sale of its products such as water filters, flavoring drops, and other hydration-related accessories. The company operates an e-commerce platform where customers can purchase its products directly. Additionally, Waterdrop has established partnerships with retailers and distributors, expanding its market reach and increasing sales volume. Subscription services for filter replacements and flavoring products also contribute to recurring revenue. The company's focus on sustainability and health-conscious consumer trends further drives growth and profitability.

Waterdrop Earnings Call Summary

Earnings Call Date:Sep 04, 2025
(Q2-2025)
|
% Change Since: |
Next Earnings Date:Dec 03, 2025
Earnings Call Sentiment Positive
The earnings call highlighted strong revenue and profit growth driven by AI integration and a robust insurance business, alongside strategic shareholder returns and social initiatives. While there were increases in operating costs, the positive aspects significantly outweighed the negatives.
Q2-2025 Updates
Positive Updates
Revenue and Operating Profit Growth
Quarterly revenue increased by 23.9% year over year, and operating profit rose by 85.9% year over year, improving the operating margin by 3.9 percentage points.
Insurance Business Growth
First-year premium in the insurance business increased by 80.2% year over year and 53.1% quarter over quarter. Insurance-related revenue rose by 28.7% year over year and 12.2% quarter over quarter.
AI Integration and Technological Advancements
Integration of AI significantly improved operational efficiency across customer acquisition, sales, underwriting, and other processes. Developed new AI tools and filed 60 patent applications related to large language models.
Shareholder Returns
Enhanced cash dividend of $10.9 million, a 50% increase over the previous dividend, and continued share repurchase program with 55.7 million ADS repurchased for $109 million.
Healthcare Sector and Social Initiatives
Raised medical funds for 3.54 million patients, partnered with 118 public charitable organizations, and initiated over 15,500 public welfare projects. Participated in relief efforts for Swab disease in North China.
Negative Updates
Increased Operating Costs
Total operating costs and expenses increased by 18.7% year over year, with marketing expenses rising by 26.3% due to increased spending on third-party traffic channels.
Decline in General and Administrative Expenses
General and administrative expenses decreased by 21.9% year over year, primarily due to tightened operational control and reduced allowance for credit losses.
Company Guidance
During the second quarter of 2025, Waterdrop reported significant financial growth, with quarterly revenue rising by 23.9% year-over-year and 11.2% quarter-over-quarter. The company attributed this success to the integration of AI technologies, which boosted operational efficiency and resulted in an 85.9% increase in operating profit, enhancing the operating margin by 3.9 percentage points. The insurance sector saw robust growth, with first-year premiums up 80.2% year-over-year and 53.1% quarter-over-quarter, contributing to a 28.7% year-over-year increase in insurance-related revenue. The company's commitment to AI innovation was underscored by 60 patent applications, nine of which were filed internationally. Additionally, Waterdrop's strategic initiatives included a 50% increase in cash dividends to $10.9 million and an ongoing share repurchase program, which has seen approximately 55.7 million ADS repurchased since 2021. Overall, the company's efforts in AI-driven innovations and social initiatives have reinforced its market position and facilitated value creation for shareholders and the industry.

Waterdrop Financial Statement Overview

Summary
Waterdrop's financial performance shows strong profitability and financial stability, with significant improvements in income statement metrics and a robust balance sheet. However, the absence of operating and free cash flow in 2024 indicates potential cash management challenges.
Income Statement
73
Positive
Waterdrop has demonstrated a strong recovery in its income statement metrics. The company achieved a notable increase in its gross profit margin, from 39.7% in 2023 to 52.5% in 2024. The net profit margin also improved significantly, reaching 13.3% in 2024 compared to 6.4% in 2023. Revenue growth was steady at 5.4%. The EBIT margin turned positive, indicating improved operational performance. However, the EBITDA margin showed a modest increase, suggesting room for further enhancement in operational efficiency.
Balance Sheet
79
Positive
The balance sheet reflects a robust financial position with a low debt-to-equity ratio of 0.05, highlighting low leverage and financial stability. The return on equity improved to 7.7% in 2024, up from 3.6% in 2023, demonstrating better profitability. The equity ratio remained strong at 74.3%, indicating a solid equity base relative to total assets. The company's conservative debt management and strong equity position contribute to its financial resilience.
Cash Flow
55
Neutral
Waterdrop's cash flow performance is mixed. The operating cash flow to net income ratio is unavailable for 2024 due to zero operating cash flow. The free cash flow to net income ratio could not be assessed for the same reason. The absence of free cash flow in 2024 indicates potential challenges in generating cash from operations, despite improvements in net income. This highlights a need for better cash flow management.
BreakdownTTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income Statement
Total Revenue2.98B2.77B2.63B2.80B3.21B3.03B
Gross Profit1.53B1.46B1.04B1.78B2.15B2.29B
EBITDA256.05M191.71M6.81M500.96M-1.84B-483.18M
Net Income440.77M367.51M167.22M607.72M-1.57B-663.85M
Balance Sheet
Total Assets6.52B6.45B6.15B5.92B5.25B4.71B
Cash, Cash Equivalents and Short-Term Investments1.66B2.60B3.39B3.70B2.79B2.26B
Total Debt79.81M243.92M197.76M14.05M58.59M64.26M
Total Liabilities1.51B1.58B1.47B1.16B1.28B1.52B
Stockholders Equity5.01B4.80B4.59B4.77B3.97B3.18B
Cash Flow
Free Cash Flow0.00218.84M392.99M753.82M-1.13B-803.82M
Operating Cash Flow0.00437.25M406.52M765.71M-1.10B-777.11M
Investing Cash Flow0.00291.64M-1.17B-139.82M-846.90M-1.22B
Financing Cash Flow0.00-198.58M-377.24M-57.46M2.12B2.05B

Waterdrop Technical Analysis

Technical Analysis Sentiment
Negative
Last Price1.81
Price Trends
50DMA
1.83
Negative
100DMA
1.68
Positive
200DMA
1.48
Positive
Market Momentum
MACD
-0.02
Positive
RSI
41.85
Neutral
STOCH
27.25
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For WDH, the sentiment is Negative. The current price of 1.81 is below the 20-day moving average (MA) of 1.86, below the 50-day MA of 1.83, and above the 200-day MA of 1.48, indicating a neutral trend. The MACD of -0.02 indicates Positive momentum. The RSI at 41.85 is Neutral, neither overbought nor oversold. The STOCH value of 27.25 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for WDH.

Waterdrop Risk Analysis

Waterdrop disclosed 104 risk factors in its most recent earnings report. Waterdrop reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 3 New Risks
1.
We have made investments in generative AI and may face uncertainties with respect to its commercialization and the evolving laws and regulations applicable to us. Q4, 2023
2.
We may be materially adversely affected by the changes and evolvement in the regulation of medical crowdfunding business. Q4, 2023
3.
The legal system in mainland China is evolving, which leads to uncertainties that could adversely affect us. Q4, 2023

Waterdrop Peers Comparison

Overall Rating
UnderperformOutperform
Sector (68)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
79
Outperform
$981.38M8.0920.11%4.50%9.52%
77
Outperform
$1.08B2.87
70
Outperform
$654.61M10.989.11%2.54%9.50%69.82%
68
Neutral
$18.00B11.429.92%3.81%9.73%1.22%
66
Neutral
$1.90B-1.83%2.48%20.42%-110.82%
62
Neutral
$2.46B59.7023.49%60.38%
48
Neutral
$129.40M0.96-24.49%10.82%
* Financial Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
WDH
Waterdrop
1.77
0.65
58.04%
FGNX
Fundamental Global
3.67
-20.33
-84.71%
IGIC
International General Insurance Holdings
22.23
3.86
21.01%
GSHD
GooseHead Insurance
68.65
-22.24
-24.47%
FIHL
Fidelis Insurance Holdings Ltd.
18.11
1.15
6.78%
YB
Yuanbao, Inc. Unsponsored ADR
22.93
7.93
52.87%

Waterdrop Corporate Events

Waterdrop Inc. Reports Strong Q2 2025 Results and Announces Cash Dividend
Sep 4, 2025

On September 4, 2025, Waterdrop Inc. announced its unaudited financial results for the second quarter of 2025, revealing a 58.7% increase in net profit and an 80.2% rise in first-year insurance premiums compared to the previous year. The company highlighted the successful integration of AI into its operations, which contributed to significant growth in revenue and profitability. Waterdrop also reported advancements in its medical crowdfunding and digital clinical trial services, alongside an enhanced cash dividend and a new share repurchase scheme, reflecting its commitment to shareholder returns.

Waterdrop Inc. Reports Strong Q2 2025 Results with Increased Dividend
Sep 4, 2025

On September 4, 2025, Waterdrop Inc. announced its unaudited financial results for the second quarter of 2025, highlighting a 58.7% year-over-year increase in net profit to RMB140.2 million. The company reported significant growth in its insurance business, with first-year premiums rising by 80.2% year-over-year, and an increase in net operating revenue by 23.9%. The integration of AI into its operations has driven productivity and service improvements, contributing to the company’s robust financial performance. Waterdrop also announced a cash dividend increase of 50% and the continuation of its share repurchase program, reflecting its commitment to shareholder returns.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.Date of analysis: Oct 23, 2025