China's Gaotu rallies again after audience spike

Reuters2023-12-15

By Bansari Mayur Kamdar

Dec 15 (Reuters) - A rally in U.S.-listed shares of Chinese online education firm Gaotu Techedu was set to extend into Friday after a surge in its livestream audience in the wake of a row over the authorship of a screenplay.

Shares of Gaotu Techedu jumped 13.8% to $5.43 in premarket trading, following an 80% rise in the last seven sessions.

The surge was triggered by a rush of fans of rival livestreaming company East Buy's popular host Yuhui Dong to Gaotu's platform during a controversy regarding the authorship of one of Dong's screenplays, according to Citi equity research analyst Alice Cai.

"This discord resulted in a notable surge in GaoTu JiaPin's live stream viewer numbers, with hundreds of thousands offering their support for Dong."

"We maintain sell on Gaotu until there is an improvement in gross billings or the company shows it can sustain and convert this traffic surge," Cai said in a note published earlier this week.

East Buy's Hong Kong shares have fallen 20% in the past two weeks, while U.S.-listed shares of parent company New Oriental Education & Technology Group have lost 2.7% in the same time period.

Despite the rally, shares of Gaotu are still down nearly 96% from their record high hit in 2021 as edtech firms have struggled since China's clampdown on its booming private tutoring industry.

Gaotu did not immediately respond to a request for comment outside of business hours.

(Reporting by Bansari Mayur Kamdar in Bengaluru; Editing by Saumyadeb Chakrabarty)

((BansariMayur.Kamdar@thomsonreuters.com; Follow on X: @BansariKamdar;))

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Shares of Gaotu Techedu    jumped 13.8% to $5.43 in  premarket trading, following an 80% rise in the last seven sessions.       The surge was triggered by a rush of fans of rival livestreaming company East Buy's popular host Yuhui Dong to Gaotu's platform during a controversy regarding the authorship of one of Dong's screenplays, according to Citi equity research analyst Alice Cai.   \"This discord resulted in a notable surge in GaoTu JiaPin's live stream viewer numbers, with hundreds of thousands offering their support for Dong.\"   \"We maintain sell on Gaotu until there is an improvement in gross billings or the company shows it can sustain and convert this traffic surge,\" Cai said in a note published earlier this week.   East Buy's Hong Kong shares    have fallen 20% in the past two weeks, while U.S.-listed shares of parent company New Oriental Education & Technology Group    have lost 2.7% in the same time period.   Despite the rally, shares of Gaotu are still down nearly 96% from their record high hit in 2021 as edtech firms have struggled since China's clampdown on its booming private tutoring industry.   Gaotu did not immediately respond to a request for comment outside of business hours. 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