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GSX Shares Tumble Amid Negative Financials and SEC Investigation
COVID-19 and China
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The Chinese online education upstart stock price plummeted by more than 15% to USD 80.44 on September 2, 20202, down by nearly 40% compared to the peak stock price of USD 131.27 on August 6. 

According to the latest released financial report, GSX's revenue in Q2 of the fiscal year 2020 was CNY 1,650 billion, a year-on-year increase of 367%, however, the net profit in the second quarter was CNY 18.6 million, a decrease of 87.4%.

In the second quarter, GSX’s marketing expenses reached CNY 1.20 billion, a year-on-year increase of 613%. Administrative expenses increased from CNY 26.1 million in the second quarter of 2019 to CNY 105.7 million, a year-on-year increase of 305%. Although GSX's revenue in the second quarter still maintained high growth, its soaring marketing and management expenses made it difficult for the company's net profit to grow simultaneously.

GSX also disclosed in the report that the Executive Department of the US Securities and Exchange Commission (SEC) has required it to provide financial and operational data since January 1, 2017.

The firm said that after a large number of short-seller reports since February 2020, the SEC's law enforcement department contacted GSX and asked to provide financial and operational records since January 1, 2017.

https://equalocean.com/news/2020081114484

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