HomeFinancial MarketsWhy Gaotu Techedu Inc. (GOTU) stock went up on Wednesday despite headwinds?

Why Gaotu Techedu Inc. (GOTU) stock went up on Wednesday despite headwinds?

Gaotu Techedu Inc. (GOTU) shares rose 1.38% in after-hours on Wednesday, July 28, 2021, and closed the daily trade at $3.67. Earlier in the regular trading on Wednesday, GOTU’s stock gained 25.26%. The stock volume remained 39.88 million shares, which was higher than the average daily volume of 12.95 million shares within the past 50 days. GOTU shares have fallen 95.76% over the last 12 months, and they have moved down 66.57% in the past week. Over the past three months, the stock has lost 89.81%, while over the past six months, it has shed 97.46%. Further, the company has a current market of $2.52 billion and its outstanding shares stood at 255.49 million.

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GOTU Stock Provided Updates on New Regulations

On July 25, 2021, Gaotu Techedu Inc (GOTU), reported that China’s official state media, including Xinhua News Agency and China Central Television, announced the Opinions on further alleviating the Burden of Homework and After-School Tutoring for Students in Compulsory Education (the “Opinion”), issued by the General Office of the CPC Central Committee and the General Office of the State Council.


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The Opinion contains high-level policy directives about requirements and restrictions related to online and offline after-school tutoring services, including, institutions providing after-school tutoring services on academic subjects in China’s compulsory education system, or Academic AST Institutions, which need to be registered as non-profit.

GSX Techedu to Gaotu Techedu Inc

On June 4, 2021, Gaotu Techedu Inc  (GOTU) changed its name from “GSX Techedu Inc.” to “Gaotu Techedu Inc. The American depositary shares of the Company, every three representing two Class A ordinary shares, par value US$0.0001 per share, began trading under the new corporate name on June 7, 2021.

GOTU Stock recent financial results announcement

On May 26, 2021, Gaotu Techedu Inc (GOTU)  formerly known as GSX Techedu Inc announced its unaudited financial results for the first quarter ended March 31, 2021.

GOTU stock Q1 2021 financial highlights

  • GOTU reported Net revenues of RMB1,940.3 million in Q1 2021 compared to $1,297.5 million in Q1 2020.
  • Gross profit was RMB1,368.8 million in Q1 2021 compared to RMB1,014.3 million in the first quarter of 2020.
  • Total operating expenses were $2,871.4 million in Q1 2021 compared to $922 million in Q1 2020.
  • It suffered a net loss of RMB1,425.9 million in Q1 2021, compared with a net income of RMB148.0 million in the same period of 2020.
  • Basic and diluted net loss per ADS was 58in Q1 2021 compared to RMB5.58, in Q1 2020.

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Conclusion

After-school tutoring service providers companies in China have sunk in the last few days after recently proposed regulations but surprisingly,  GOTU surged on Wednesday which is a bit strange. We are not sure how it will perform in the coming days.

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