GSX Stock Soars 11% on Fivefold Revenue Increase

GSX stock hit a historic high last week

Author: Anthony Russo   

The stock in GSX Techedu Inc. (NYSE: GSX) soared 11% to $38.44 per American depositary share in early trading on Tuesday after the company announced its revenue grew more than fivefold and it generated strong net income in the fourth quarter. 

The Beijing-based afterschool tutoring service provider said in a statement today that in the three months through December its revenues reached $134.3 million, up 413% year-over-year. GSX attributed the growth in the quarter to paid course enrollments for K-12 courses. Student enrollments reached 1.1 million, a 290% increase from the same period in 2018. 

Net income in the quarter was $25.1 million, or 10 cents per share, compared with $3.3 million in the previous year. 

While many Chinese companies listed in the United States have struggled in the markets over coronavirus concerns, shares of GSX have jumped in the past month. That occurred after GSX announced the closing of its commercial real estate purchase in Zhengzhou for $48 million in January. Last week, GSX's stock hit a historic high of $42.07 per share.

Raising $207.9 million in its June 2019 IPO, GSX shares have far exceeded its issuance price of $10.50 per share.

Founded in 2014, GSX offers K-12 courses in foreign languages, professional, and interest areas. The company also integrates an online live large-class system to deliver its services. 

Last month, GSX donated $2.9 million worth of online courses to K-12 students in Wuhan amid the coronavirus epidemic.

Larry Xiangdong Chen, the chairman and chief executive officer of GSX, said the company plans to improve its working capital this year. 

"We focus on delivering teaching quality, strengthening organizational capability, improving operational efficiency, as well as attracting intelligent, education-loved and dedicated talents," Chen said in a statement today.

He added, "As 2020 unfolds, we continue to be committed to hiring and retaining top-notch teachers and talented professionals, investing significantly into technology and content development, and spending wisely in high ROI channels to expand and leverage our customer base, as we move to establish an enduring brand."

GSX said it expects to generate revenues of between $155.2 million and $158.1 million in the first quarter.