LAIX Inc. (NYSE: LAIX) was trading 4% early Wednesday on news of a going-private consideration amid a turbulent time for China education providers.
The company's founding managers including the chairman and CEO Yi Wang, CTO Zheren Hu, chief scientist Hui Lin were joined by investor fund PCIL IV Ltd. in a proposal to take LAIX private at $1.13 per share.
The price, representing a 14% upside from Tuesday's close, sent the stock in the struggling Chinese company to $1.03 per share intraday Wednesday.
Indeed, the Shanghai-based company, which operates the Liulishuo app and provides AI-powered products and services for English learning, has been a so-called penny stock for over a year. As far back as August 2019, LAIX announced "growth deceleration" in its outlook and has since consistently disappointed with its financial performance.
In its latest earnings report, covering the three months through March 2021, LAIX reported a 13% year-over-year decline in revenue to $30.3 million. On a positive note, LAIX achieved profitability for the first time, showing $1.9 million, or 4 cents per share, in income for the quarter in contrast to earlier losses.
Year-to-date, shares in LAIX are down 28%, though the stock did peak at $11.65 per share during the February wild run. Still, the general trend since LAIX completed its IPO in September 2018 has been downward from the IPO issue level of $12.50. Now, as LAIX shares have slipped below the required minimum, its executives seek privatization.
On a side note, in early July, Zacks Research rated LAIX a "strong buy," citing an upward trend in earnings estimates.
In the statement today, LAIX said it will evaluate the proposal from the buyer group.