Gaotu Techedu Inc. (GOTU) stock is Popping High in the premarket: Here’s Why

Shares of the Gaotu Techedu Inc. (GOTU) stock were popping high in the premarket on November 8, 2021. GOTU stock price saw a push of 23.07% to reach $3.52 a share at the time of this writing. The stock was also performing well in the previous trade and went up by 0.35% at closing. Let’s understand the reason behind this bull.

What’s Happening?

There is no specific reason associated with the rising per-share price of the Gaotu stock. No recent announcement or press release has been announced by the GOTU stock. The stock is getting hype due to the discussions between investors on social media platforms as they are optimistic that this stock will further rise in the future.

Investigations against Goldman Sachs and Morgan Stanley on behalf of investors of GOTU stock:

Pomerantz LLP has recently announced the investigations against  Gaotu Techedu stock on behalf of investors of the GOTU stock. The law firm will investigate whether Goldman Sachs Group Inc and Morgan Stanley and certain of its directors or officers are involved in unlawful business practices and engaged in securities fraud

The media have reported that Goldman Sachs and Morgan Stanley in March 2021 were aware of the fact that Archegos Capital Management had failed to meet a margin call requiring Archegos to fully liquidate its position in Gaotu. Still, Goldman Sachs and Morgan Stanley sold GOTU securities in late March 2021 and ignored the loss of billions of dollars on their Gaotu investment. When the news regarding Archegos’s difficulties spread in the market, GOTU stock sharply declined that damaged its investors.

Financial View of GOTU stock:

According to the second quarter 2021 financial results which GOTU stock announced on September 22, 2021

  • Net revenue reached RMB2,232.3 million which represents an increase of 35.3% over the year.
  • Gross billings of the company increased by 12.2% YoY to reach RMB2,694.7 million in the second quarter of 2021.
  • The company reported that its paid course enrollments over the year increased by 4.1%. The company enrolled 1,631 thousand students in the reported quarter.
  • GOTU stock suffered a net loss of RMB918.8 million in the second quarter of 2021 as compared to RMB18.6 million in the same tenure of the previous year.
  • The non-GAAP net loss reached RMB763.9 million compared to RMB72.7 million non-GAAP net income in Q2,2020.
  • GOTU stock reported RMB1,976.4 million deferred revenue in the second quarter of 2021.

Wrap Up:

The sentiment is positive for Gaotu stock amid the investigations against Goldman Sachs and Morgan Stanley on behalf of GOTU investors. The stock suffered a lot in 2021 as it lost almost 94% year to date.