Core Viewpoint - The announcement of share reduction by Huang Shan, the controlling shareholder and chairman of Wealth Trend, indicates potential concerns regarding the company's short-term profitability and market confidence, especially in light of recent performance declines and ongoing AI transformation challenges [1][12]. Group 1: Share Reduction Details - Huang Shan plans to reduce his holdings by up to 7,683,400 shares, representing 3% of the total share capital, with an estimated cash-out of approximately 800 million yuan based on the closing price of 104.19 yuan [2]. - The reduction window is set from July 25, 2025, to October 24, 2025, coinciding with the performance verification period following the registration of the company's AI product [2]. Group 2: Shareholder Behavior and Motivations - Huang Shan's shareholding will decrease from 68.23% to 65.23%, maintaining absolute control, with the stated reason for the reduction being "personal funding needs" [4]. - Historical context shows a previous attempt to reduce shares in July 2023 that was aborted, and recent insider selling by other executives suggests a lack of confidence in the company's short-term outlook [4]. Group 3: Financial Performance and Challenges - The company has experienced continuous revenue decline, with 2024 projected revenue at 389 million yuan (down 10.51% year-on-year) and Q1 2025 revenue at 54.9 million yuan (down 22.72% year-on-year) [5][6]. - The primary reasons for the decline include reduced IT spending by brokerages and intensified competition, leading to weak demand for traditional software sales [6]. Group 4: AI Transformation and Market Impact - Despite efforts to pivot towards AI, the new business contributions remain limited, with AI-related revenue accounting for only 19.66% and showing slow growth [7]. - The market is expected to react to the share reduction, with historical data indicating an average 5% drop in stock price within five days of similar announcements, although a rebound of 36.59% is observed within 30 days [8]. Group 5: Investment Implications - The company faces short-term liquidity challenges and a potential crisis of market trust due to the share reduction, alongside the long-term necessity to demonstrate the commercial viability of its AI products [10]. - Investors are advised to be cautious of potential short-term selling pressure and to monitor the mid-2025 report for AI business performance and client engagement [11].