After Grizzly Research issued a report alleging that Beijing-based online education platform GSX Techedu cooks its financials, the startup’s founder and chairman, Chen Xiangdong, issued a rebuttal, calling the accusation “sheer nonsense” in a response to 36Kr on Wednesday.
Grizzly Research said in its 59-page report that “GSX has apparently been overstating its net profit by an astounding 74.6% in 2018.” The document contained many other bearish comments pointing at GSX.
According to GSX’s initial public offering prospectus, the company generated net income of RMB 19.7 million (USD 2.9 million) in 2018, as well as net income of RMB 33.9 million in the three months ended March 31 in 2019.
GSX was set up in 2014 to provide Chinese primary and secondary students with live-broadcast courses. It went public in the United States last June with a USD 193 million IPO. At the time, it was the only profitable China-based online education company.
36Kr is KrASIA’s parent company.
This article is part of KrASIA’s “China Brief” section, where KrASIA’s reporters will provide quick daily updates about the tech ecosystem in China.