GOTU & EDU: Two trending Chinese education stocks on Wednesday

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GOTU & EDU: Two trending Chinese education stocks on Wednesday

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 GOTU & EDU: Two trending Chinese education stocks on Wednesday
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Highlights

  • Gaotu Techedu Inc. (NYSE: GOTU) revenue grew by 35.3% YoY in Q2, 2021. The stock jumped around 26% on Wednesday.

  • New Oriental Education & Technology Group, Inc. (NYSE: EDU) rose about 5%. It has a P/E ratio of 8.29.

  • GOTU stock fell 94% and EDU fell 89.29% YTD.

Stocks of Gaotu Techedu Inc. (NYSE: GOTU) and New Oriental Education & Technology Group, Inc. (NYSE: EDU) rose more than 26% and 4%, respectively, in intraday trading on Wednesday.

GOTU closed at US$3.10, up 26.02%, and EDU closed at US$1.99, up 4.74%, at 4:00 pm ET. However, GOTU waded into the red zone in the after-hours trading session.

Gaotu Techedu Inc. 

This Beijing-based education technology company provides online courses for K-12. It covers primary to secondary grades. It also offers foreign language and professional courses.

Its 52-week highest and lowest stock prices were US$149.05 and US$2.25, respectively. The stock saw high trading volume following its quarterly results on Wednesday.

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The company earned revenue of RMB2,232.3 million in the second quarter ended June 30, 2021, reflecting an increase of 35.3% YoY. It booked a net loss of RMB918.8 million compared to the net income of RMB18.6 million in the corresponding period of 2020.

GOTU’s gross profit increased by 16.9% to RMB1,508.0 million against RMB1,289.7 million in Q2 of 2020. However, its gross profit margin declined to 67.6% from 78.1% in Q2, 2020.

The cash and cash equivalents, restricted cash, short-term investments, and long-term investments were RMB5,486.9 million in the aggregate, as of June 30, 2021.

The company has a market capitalization of US$792 million.

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Two trending education stocks: Gaotu Inc and New Oriental Education & Technology Group, Inc (EDU).

Source – pixabay

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New Oriental Education & Technology Group, Inc. 

It is one of the largest private education service providers based in Beijing. The company offers various courses, including foreign language training, after-school tutoring, primary and secondary school education, etc. 

Its 52-week highest and lowest stock prices were US$19.97 and US$1.68, respectively. 

The government’s recent clampdown on tech companies has increased the volatility of some Chinese stocks. It may have a long-term impact on their bottom-line growth and overall performance if regulatory pressures remain. 

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The stock saw increased trading volume on Wednesday for no apparent reason. The company’s revenue rose to US$1,190.5 million, up 29.0% YoY, in the third quarter of fiscal 2021. At the same time, its net income increased by 9.9% YoY to US$151.3 million in the same period.

The company has a market capitalization of US$3.39 billion and a P/E ratio of 8.29.

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Bottomline

Early this month, the government had asked the education companies to change their status from “for-profit” to “non-profit” organizations by the end of 2021. Education stocks were hit hard after the order. However, investors should carefully evaluate the stocks before investing.

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