Gaotu Stock Story

GOTU

Stock

USD 1.56 0.05 3.11%

Macroaxis Story

Gaotu Techedu Assets Non Current are comparatively stable at the moment as compared to the past year. Gaotu Techedu reported Assets Non Current of 1.09 Billion in 2021. Cash and Equivalents is likely to gain to about 967.9 M in 2022, whereas Earnings before Tax are likely to drop (3.1 B) in 2022. While many traders today are more concerned about the preservation of capital over market returns, Gaotu Techedu could be one exception. We will evaluate why we are still optimistic in anticipation of a recovery. Here I will also expose some primary fundamental factors affecting Gaotu Techedu's services, and outline how it will impact the outlook for investors this year.

Published over two months ago

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What are the odds of Gaotu Techedu to drop in June?

The company reported the previous year's revenue of 6.56 B. Net Loss for the year was (3.1 B) with profit before overhead, payroll, taxes, and interest of 4.16 B. The company has Profit Margin (PM) of (47.3) %, which may suggest that it does not properly executes on its current pricing strategies or is unable to control all of the operational costs. This is way below average. Similarly, it shows Operating Margin (OM) of (44.78) %, which suggests for every $100 dollars of sales, it generated a net operating loss of -0.45.

How important is Gaotu Techedu's Liquidity

Gaotu Techedu financial leverage refers to using borrowed capital as a funding source to finance Gaotu Techedu ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Gaotu Techedu financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between Gaotu Techedu's total debt and its cash.

How does Gaotu utilize its cash?

To perform a cash flow analysis of Gaotu Techedu, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Gaotu Techedu is receiving and how much cash it distributes out in a given period. The Gaotu Techedu cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities.

Gaotu Techedu Net Cash Flow from Operations is comparatively stable at the moment as compared to the past year. Gaotu Techedu reported Net Cash Flow from Operations of (4.19 Billion) in 2021

Detailed Perspective On Gaotu Techedu

Gaotu Techedu secures a total of 256.4 Million outstanding shares. 30% of Gaotu Techedu outstanding shares are owned by outside corporations. Institutional investors are typically referred to investors that purchase positions in a given stock to benefit from reduced commissions. Consequently, institutional investors are subject to different rules and regulation than regular investors. Please look out for any change in current institutional holding as this could mean something significant has changed at the company or about to change. Remember, it does not matter who owns the company or if the company is currently losing money. If the true value of the company is more than the market pays for it currently, you can still have a good investment opportunity.

Ownership Breakdown

Retail Investors

62.26%

Institutions

35.97%

	Retail Investors	62.26
	Insiders	1.77
	Institutions	35.97

Gaotu technical analysis implies possible recoup

The coefficient of variation is down to -2672.38 as of today. Gaotu Techedu is displaying above-average volatility over the selected time horizon. Investors should scrutinize Gaotu Techedu independently to ensure intended market timing strategies are aligned with expectations about Gaotu Techedu volatility. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure Gaotu Techedu's stock risk against market volatility during both bullying and bearish trends. The higher level of volatility that comes with bear markets can directly impact Gaotu Techedu's stock price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different stocks as prices fall.

Gaotu Techedu Implied Volatility

Gaotu Techedu's implied volatility exposes the market's sentiment of Gaotu Techedu stock's possible movements over time. However, it does not forecast the overall direction of its price. In a nutshell, if Gaotu Techedu's implied volatility is high, the market thinks the stock has potential for high price swings in either direction. On the other hand, the low implied volatility suggests that Gaotu Techedu stock will not fluctuate a lot when Gaotu Techedu's options are near their expiration.

Our Final Takeaway

Whereas some other companies in the education & training services industry are either recovering or due for a correction, Gaotu Techedu may not be performing as strong as the other in terms of long-term growth potentials. Taking everything into account, as of the 29th of May 2022, we believe Gaotu Techedu is currently undervalued. It actively responds to the market and projects above average chance of bankruptcy in the next two years. However, our final 90 days buy-or-sell advice on the firm is Strong Sell.

Editorial Staff

Vlad Skutelnik is a Macroaxis Contributor. Vlad covers stocks, funds, cryptocurrencies, and ETFs that are traded in North America, focusing primarily on fundamentals, valuation and market volatility. He has many years of experience in fintech, predictive investment analytics, and risk management. View Profile

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Vlad Skutelnik do not own shares of Gaotu Techedu. Please refer to our Terms of Use for any information regarding our disclosure principles.

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