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Briefing
Jul 2, 2020 · Yahoo finance
Briefing
Jul 2, 2020 · Yahoo finance

GSX Techedu Shares Break Previous Records

Analysis EO
Jun 28, 2020
report
Analysis EO
Jun 28, 2020

GSX Seemingly Immune to Allegations as Stock Price Reaches New Highs

GSX Techedu, a firm with a current market cap of USD 13.4 billion, saw its stocks reach USD 57.81 – an all-time high since getting listed almost a year ago, in June 2019. The firm has been performing rather well on the stock market regardless of being shorted 10 times within 3 months.  One of China’s largest online education firms is becoming a battle-ground stock. Short interest – people betting against it – is surging due to prominent fraud allegations. The reason behind the stock surging may well be the firm’s management openly disputing the accusations since which the stock has rallied nearly 60%, suggesting at least some investors find the explanations reasonable. On February 26, Grizzly Research, a research firm that produces differentiated research insights on publicly traded companies, released a 50-page report, ‘Why We Believe GSX Techedu is the Worst Publicly Traded Education Company.’ The firm really took a hit on April 14, after short-seller Citron said it's ‘the most blatant Chinese stock fraud since 2011.’ Following Citron's first report, as many as 16 US law firms initiated class actions to investigate the Chinese education company that was recently valued at USD 10 billion, for exaggerating profitability. The survey focused on whether the company overstated indicators such as profitability, income, student enrollment, and teacher qualifications, or did not disclose information related to investors. What’s worse, on May 7, Citron Research issued the third part of the report in a series of GSX Investigations. Citron presented to US regulators definitive evidence of GSX Techedu committing securities fraud using multiple undisclosed related party transactions to hide expenses/liabilities. The report also pointed out that it is highly unlikely that GSX claimed to acquire a customer at half the cost vs. peers. And over 80 highly suspicious WeChat official accounts engaging in customer acquisition solely for GSX that were not registered to any disclosed GSX entity. Muddy Waters, the same firm which unveiled the Luckin Coffee fraud, joined the party in late May, claiming at least 70% of the firm’s users are robots and calling it a massive loss-making business. The ADRs tumbled 34% from their Feb. 24 peak the following day.  Larry Chen, the founder of GSX, replied via his social media account by saying, “Muddy Waters did some homework for the report. It’s just a pity that they didn’t understand the business model of our online live large class.” As of June 24, according to Bloomberg, Carson Block, the founder of Muddy Waters Capital LLC, has renewed his short-selling attack on the Chinese after-school tutoring platform. Block called the USD 14 billion stock’s recent price surge “a massive middle finger pointed at Washington.” He also alleged failure by China’s securities watchdog to regulate the US-listed company. It's fair to note GSX’s management has been providing investors with explanations for these fraud accusations. So, the investors have to either believe the company they have invested in – or put faith in these short sellers. Both Muddy Waters and Grizzly Research provided instructions for investors wanting to replicate their findings. The accusations are quite serious. Such stories can bring a company’s stock to record lows or even get delisted if proven. The investors themselves should do some extra due diligence with the stock – i.e. verify the research findings and compare to GSX Techedu management's explanations. The ones not willing to put forth this extra effort shouldn't consider buying shares, at least until these allegations are resolved.  It is evident that the epidemic has created a window of opportunity for huge tech giants to enter the education industry but at the same time firms which are already are in the business have stepped up to prove the strength and advantages of online education. By providing free online classes, companies such as Yuanfudao, GSX Tecchedu and Zuoyebang gained millions of users. According to a recently released iiMedia's (艾媒) research report on the development of China's online education industry, the online education market in China reached CNY 404.1 billion in 2019 and it is expected to reach CNY 453.8 billion in 2020. The report further stated that the total number of online education users in China is expected to reach 309 million by 2020, around 40 million more than the estimates of iResearch.

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Jun 6, 2020 · Gawain Research
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May 22, 2020 · ittime
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May 20, 2020 · DoNews
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May 20, 2020 · zhitongcaijing
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May 20, 2020 · zhitongcaijing

Citron to Issue the Fourth Part of Short Report Soon

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May 19, 2020 · bjnews
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May 19, 2020 · Muddy Waters
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May 19, 2020 · Muddy Waters

MW is Short GSX Techedu Inc. (GSX US)

News
May 15, 2020 · 36Kr
News EO
May 8, 2020
report
News EO
May 8, 2020

Citron Research Attacks GSX Again

During past months, GSX Techedu(NYSE:GSX) has been accused of defrauding investors by two short-sellers. On February 26, Grizzly Research, a research firm that produces differentiated research insights on publicly traded companies, released a 50-page report, ‘Why We Believe GSX Techedu is the Worst Publicly Traded Education Company.’ The firm really took a hit on April 14, after short-seller Citron said it's ‘the most blatant Chinese stock fraud since 2011.’ Following Citron's first report, as many as 16 US law firms initiated class actions to investigate the recently USD 10 billion valued Chinese education company, for exaggerating profitability. The survey focused on whether the company overstated indicators such as profitability, income, student enrollment, and teacher qualifications, or did not disclose information related to investors. What’s worse, on May 7, Citron Research issued the third part of the report in Series of GSX Investigation. Citron presented to US regulators definitive evidence of GSX Techedu committing securities fraud using multiple undisclosed related party transactions to hide expenses/liabilities. The report also pointed out that it is highly unlikely that GSX claimed to acquire a customer at half the cost vs. peers. And over 80 highly suspicious WeChat official accounts engaging in customer acquisition solely for GSX that was not registered to any disclosed GSX entity. On Thursday, it was all going good for the NYSE-listed firm as it saw its stocks rise 4.82% to USD 40.87 but fell 1.37% soon after the short report was published. The firm released its 2020 first-quarter financial report this Wednesday which showed that the firm managed to rack up a net income of CNY 1.298 billion, an increase of 336.6% year-on-year and an increase of 488% year-on-year of its core K12 business. It stated that the increase in total net income was mainly due to the increase in enrollment of paid K-12 courses. The number of registered users enrolled in paid courses increased by 307.4% over the same period last year, reaching 774,000. "The report published by Citron is really bad. There is no substantial evidence and the so-called quantitative analysis is far from accurate," said Chen Xiangdong, the founder of GSX Techedu. GSX was quick to respond to this latest report. The firm said that the WeChat official accounts mentioned in the report are the cooperators of GSX in market launch and promotion. These official accounts issued educational information, which aims to serve the students and expand the company's business. GSX emphasized that Wechat daily users are more than 1 billion, so Wechat is always one of the most effective promotion channels. The company has disclosed all related parties in the financial report. The number of regular course payers disclosed in the financial report is based on their payment time. In the fourth quarter of 2019, a large amount of the students chose to study in the first half of 2020. So there are nearly 1.2 million regular course students in spring plus the users enrolled in the first quarter of 2020.

News EO
May 6, 2020
report
News EO
May 6, 2020

GSX Sees 336% Increase in Net Profits for Q1 2020

►Net revenues up by 382% YoY. ►The number of paid users reach 774,000. ►The expected net income in the second quarter of 2020 to be between CNY 1.526 billion and CNY 1.556 billion. The NYSE-listed online education firm, GSX Techedu today released its first-quarter financial results for the year 2020. The report shows that the firm managed to rack up a net income of CNY 1.298 billion, an increase of 336.6% year-on-year and an increase of 488% year-on-year of its core K12 business.  The increase in total net income was mainly due to the increase in enrollment of paid K-12 courses. The number of registered users enrolled in paid courses increased by 307.4% over the same period last year, reaching 774,000. As of March 31, 2020, the company had CNY 565.2 million of cash and cash equivalents, CNY 1,003.1 million of short-term investment and CNY 1,169 million of long-term investments, compared with CNY 74 million of cash and cash equivalents, CNY 1,473.5 million short-term investments and CNY 1,188.3 million long-term investments as of December 31, 2019. According to the report, the increase of cash and cash equivalents is mainly due to the maturity of short-term wealth management investments in the first quarter of 2020.  According to the current estimates of the company, the total net income in the second quarter of 2020 is expected to be between CNY 1.526 billion and CNY 1.556 billion, an increase of 331.4% to 339.9% year-on-year. The company's board of directors approved a stock repurchase plan, under which the company can repurchase up to USD 150 million of stocks, valid until May 6, 2022. The company plans to fund the repurchase from its existing cash balance and recovery of wealth management products. The current results and the estimates for the coming quarter look quite promising for a company that has had a turbulent two months or so. The firm was accused multiple times first by Grizzly research for financial fraud and then later by Citron research, a well-known short-selling agency, for forging 40% of registered users and falsifying its financial situation through undisclosed affiliates. After Luckin Coffee’s huge transaction fraud was exposed, and Chinese education giant TAL’s employee conspired with an external supplier to falsify the company’s sales revenue by forging contracts and other documents, the Chinese stock market encountered a crisis of trust. Recently, as many as 16 US law firms initiated a class action to investigate the recently USD 10 billion valued Chinese education company, for exaggerating profitability. The survey focused on whether the company overstated indicators such as profitability, income, student enrollment, and teacher qualifications, or did not disclose information related to investors. During the past two months, the firm saw its shares rise and fall due to various reasons as mentioned above. As of yesterday's close, the share price of GSX was reported at USD 39.68, compared with less than USD 10 when it first landed in US stocks in June 2019. Since then the stock price has quadrupled. In February this year, the stock price reached a historical high of USD 45.42. Citron Research yesterday tweeted saying that it can't wait for GSX Techedu earnings so it can follow up with the ‘truth’ on Thursday.

News EO
Apr 26, 2020
report
News EO
Apr 26, 2020

GSX Stocks Dwindle Amid US law Firms Investigation

► A month full of turbulence for GSX stocks.  ► US law firms want GSX to compensate investors.  According to 36kr, as many as 16 US law firms have initiated class actions to investigate the recently USD 10 billion valued Chinese education company, for exaggerating profitability. The survey focused on whether the company overstated indicators such as profitability, income, student enrollment, and teacher qualifications, or did not disclose information related to investors. The law firms claim that investors who bought GSX stocks since it went public, have the opportunity to receive compensation, and encouraged investors who lost more than USD 100,000 to apply for the compensation.  It was all going good for the NYSE-listed firm as it saw its stocks rise almost 10% to as high as USD 44.98, pushing its market value to over USD 10 billion back on February 22, 2020. That didn’t last for long – after reaching its record high, it fell 3.96% to USD 43.3 the following day. To further worsen the situation, on February 26, Grizzly Research, a research firm that produces differentiated research insights on publicly traded companies, released a 50-page report, ‘Why We Believe GSX Techedu is the Worst Publicly Traded Education Company.’ The firm really took a hit on April 14, after short-seller Citron said it's ‘the most blatant Chinese stock fraud since 2011.’ Seven law firms, Schall, Frank R. Cruz, Howard G. Smith, GlancyProngay & Murray, Hagens Berman, LabatonSucharow, Holzer&Holzer, all filed a class-action lawsuit within the next day after the release of the Citron Report. The reason why Citron has a bigger name than Grizzly research is that the later report had a greater impact as compared to the first. Another reason might be related to the trust crisis of the Chinese stock market caused after Luckin Coffee’s huge transaction fraud was exposed. GSX was quick to respond as on April 15, Chen Xiangdong, its founder, chairman and CEO, responded in an official statement, by saying “Time will soon prove everything,” and that Citron did not understand the company's business operations.  Annual report data of the GSX techedu also encountered market doubts. Forcing the company to hold media communication conference. At the conference, GSX disclosed to investors detailed company data in multiple dimensions, including cash. The firm disclosed the distribution of cash and cash equivalents, short-term investment and long-term wealth management investment. After holding a conference for consecutive days from April 8 to 9, GSX saw its stock price surge 8.8% to USD 33.16. It is worth noting that the share price of education stocks fell across the board. Youdao (DAO: NYSE) and New Oriental (EDU: NYSE) also saw their stocks plunge.  TAL (TAL: NYSE) another major education stock, has also become the subject of investigations by many US law firms after revealing that an employee conspired with an external supplier to falsify the company’s sales revenue by forging contracts and other documents. As of today (02:36 pm Beijing time), the firms' stocks have fallen to USD 47.39, down by 4.84 %.

News EO
Apr 12, 2020
report
News EO
Apr 12, 2020

Conference Call Helps Stabilize GSX Stocks

On February 22, following a strong fourth-quarter report, NYSE-listed Chinese online education company GSX techedu (GSX: NYSE) saw its stock rise almost 10% to as high as USD 44.98, pushing its market value to over USD 10 billion. The Beijing-based, online K12 large-class after-school tutoring service provider became the world's fastest and the third Chinese Edtech company to break through the USD 10 billion mark after New Oriental (EDU: NYSE) and TAL (TAL: NYSE).   This didn’t last for long – after reaching its record high of USD 45.42 per share on February 22, it fell 3.96% to USD 43.3 the following day. Grizzly Research, a research firm that produces differentiated research insights on publicly traded companies, released a 50-page report, ‘Why We Believe GSX Techedu is the Worst Publicly Traded Education Company.’ The report stated that China’s recent stock market figures, which have attracted much attention from the capital market, represent exaggerated financial data. After Luckin Coffee’s huge transaction fraud was exposed, and Chinese education giant TAL’s employee conspired with an external supplier to falsify the company’s sales revenue by forging contracts and other documents, the Chinese stock market encountered a crisis of trust. Recently released annual report data of the GSX techedu also encountered market doubts. Forcing the company to hold media communication conference. At the conference, GSX disclosed to investors detailed company data in multiple dimensions, including cash. The firm disclosed the distribution of cash and cash equivalents, short-term investment and long-term wealth management investment. As of December 31, 2019, the company held cash and cash equivalents equivalent to CNY 74 million, short-term investment equivalent to CNY 1.47 billion, long-term investment equivalent to CNY 1.19 billion. Among them, CNY assets are held by seven domestic entities, and the USD assets mainly derived from IPOs are held by overseas Cayman entities, and no foreign exchange settlement transactions have been conducted since the IPO. When asked about the reduction of stock and the problem of stock pledges. Larry Xiangdong Chen, the founder of the firm said, “So far, no one from the core management of GSX has reduced stocks. Many of our first-line partners were reluctant to sell company stocks during the window period in March.” After holding a conference for consecutive days from April 8 to 9, GSX saw its stock price surge 8.8% to USD 33.16 as it closed on Thursday.  Despite being influenced by many factors, the stock price, which is more than USD 32, compared with less than USD 10 at the beginning of the listing, has more than tripled. 

Research
Apr 1, 2020 · The above information is fromTF Securities, with source link: www.tfzq.com/. Please contact this company if full report is needed.
Research
Apr 1, 2020 · The above information is fromTF Securities, with source link: www.tfzq.com/. Please contact this company if full report is needed.

Renowned teachers join technology equipped GSX 

Analysis
Mar 4, 2020 · Golden Alpha
Analysis
Feb 26, 2020 · 36Kr
Analysis
Feb 21, 2020 · 21 Finance
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