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KEY STAT | Edtech GSX hit with nine short attacks in three months

The company has been the target of many American due diligence firms after posting huge growth in the first quarter of 2020.

Chinese online classroom operator GSX Techedu (NYSE: GSX) set a new historical record for US-listed Chinese companies after it received its ninth short report in three months on June 2.

Grizzly Research, the due diligence firm that began the torrent of short attacks on GSX on February 25, recently published a second report following up on its previous allegations that GSX is fabricating its numbers of student customers and revenue.

Grizzly’s report was immediately retweeted by Citron Research and Muddy Waters Research, who also released short reports on GSX in the past few months.

Together with Scorpio VC, the four institutes gained a total of USD 246 million from the sudden drop in GSX’s share price, calculated 36Kr.

However, the latest report from Grizzly seemed to have little impact on the stock price of GSX.

GSX refuted all the accusations, saying that the research reports have cited inaccurate and unreliable data while failing to understand its business.

Following coffee company Luckin’s fabrication of USD 310 million in revenue earlier this year, US-listed Chinese companies are facing increased scrutiny from American short-sellers, as well as tightening regulations.

Amid the tension, Chinese internet giants are filing domestic secondary listings with the Hong Kong Stock Exchange, where they are enthusiastically welcomed, NetEase (NASDAQ: NTES), for example, was oversubscribed 74 times in first two days of its IPO.

The embattled education startup GSX posted hyper-growth in both net revenues and net income for 2020 Q1. It booked USD 182 million in net revenue, a 382% increase year-on-year (YoY), while net income climbed 336.6% YoY to USD 21 million, KrASIA reported.

 

36Kr is KrASIA’s parent company.