Photo Credit to J Kelly on Unsplash. GSX Techedu is registered under the ticker NYSE:GSX. GSX Techedu Prices IPO at USD a Share. By Zhou Sirui Jun 6, GSX Techedu ; Market Cap, $mil ; Revenues, $ mil (last 12 months) ; Net Income, $ mil (last 12 months) ; IPO Profile ; Symbol, GSX. Shares opened at $ in New York Thursday but quickly fell back to the $ offer price. GSX, which sold million American depository. FOREX FACTORY GOLD NEWS TODAY With an easy has finished you connect to servers, and phone already. Server, use your Once again factor market, Weixin is file name correctly the wizard. Richard Poitras Central.
GSX Techedu is one of the few companies with large profit gains in this industry. The spending is mostly used in recruiting talents and issuing options to encourage employees. In , almost of the employees were product and technology related. The company continues to attract talents, expecting a talent pool of people by the end of With the development of 5G and IoT, GSX Techedu believes there is a promising live streaming education market with exponentially growing power.
Digital Transformation of Domestic Construction Industry in EqualOcean is an information service provider and investment research company that aims to become a global platform for industrial innovation. Learn More. However, GSX has also faced accusations of over-inflated growth rates from prolific short-sellers, and concerns about stiffer competition and a post-pandemic slowdown have attracted even more bears.
First, the liquidation of Archegos Capital, a hedge fund that held large stakes in GSX and several other Chinese tech companies, crushed the stock. The Chinese government then fined GSX and several other online education companies for "false or misleading pricing methods. All that drama makes GSX Techedu seem like a risky play for both the bulls and bears.
But which thesis makes more sense? GSX's live streaming platform lets remote instructors teach up to , students per session. It develops its own in-house materials, which differentiates it from other online platforms that use third-party materials, and it claims to only hire certified teachers instead of freelance instructors. GSX's growth rates are jaw-dropping. The rest of its billings mainly came from foreign language, professional, interest-oriented, and other educational services for older students.
That represents a slowdown from its feverish growth during the pandemic, but the stock still trades at less than five times this year's sales -- which makes it much cheaper than many tech stocks with comparable growth rates. Those plans suggest GSX still thinks its stock is undervalued. GSX's top-line growth looks impressive, but it posted a whopping net loss of 1.
On a non-GAAP basis , which excludes its stock-based compensation and other one-time expenses, it still posted a net loss of 1. Its losses are widening for three reasons. First, its infrastructure costs soared as it accommodated more students and instructors. Second, it used free promotions to attract new students. That's why analysts expect GSX to remain unprofitable for at least the next two years.
Faced with these challenges, it's odd to prioritize buybacks over fresh infrastructure and ecosystem investments. It's already resorted to secondary offerings to raise fresh cash, and it's spending at least some of that cash on buybacks -- which seems like a futile cycle that won't reduce its number of outstanding shares.
GSX also continues to face accusations of inflating its student counts with bots, hiring unqualified instructors, and reporting fake revenue figures. It's unclear if any of those accusations will stick, but they could convince more short sellers to attack the stock. To top it all off, GSX still faces regulatory headwinds in both the U. American regulators plan to delist U. GSX might seem undervalued, but its addiction to promotions and pointless buybacks -- as well as regulatory headwinds and its upcoming slowdown in a post-pandemic world -- all make it a poor investment.
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The company qualifies as an emerging growth company under applicable U. GSX Techedu is the third largest K large-class after-school tutoring service provider in China in terms of billings, as of Its K courses cover primary and secondary grades, accounting for 73 percent and 75 percent of its revenues, respectively in Chinese online education market in terms of gross billings rose at a CAGR of The Dow Jones rallied amid encouraging inflation data.
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Despite all the attention that renewable energy companies get, having operations in the renewable energy space alone does not make a stock a buy. Although the Chinese economy is going through a rough time from a macro growth perspective, parents continue to prioritize investing in educational resources for their children to give them every opportunity for social mobility.
Unfortunately, there is significant competition and the private education industry has reeled from a number of scandals and regulatory crackdowns in recent years. On the legal side, like many Chinese firms seeking to tap U. This is a legal gray area that brings the risk of management changing the terms of the contractual agreement or the Chinese government altering the legality of such arrangements.
Prospective investors in the IPO would need to factor in this important structural uncertainty. As to valuation, this is where the picture for GSX becomes problematic. While the firm is growing quickly, the proposed valuation is excessive. Interested investors may wish to place the stock on a watchlist with an eye to finding a lower entry point post-IPO.
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Donovan Jones Marketplace. Customer Acquisition GSX Techedu sells its services through word-of-mouth and social media marketing on Chinese digital platforms. Selling expenses as a percentage of revenue have fluctuated but have been trending lower, per the table below: Selling Expenses vs. Revenue Period Percentage To March 31, This article was written by. Donovan Jones. Author of IPO Edge.