PHILADELPHIA, April 15, 2020 (GLOBE NEWSWIRE) -- Kehoe Law Firm, P.C. is investigating potential securities claims on behalf of investors of the American Depositary Shares (“ADS”) of GSX Techedu Inc. (“GSX Techedu” or the “Company”) (NYSE: GSX), as a result of allegations that GSX Techedu may have issued materially misleading business information to the investing public.
On April 14, 2020, Citron Research issued a report (“GSX Techedu Inc – The Most Blatant Chines Stock Fraud since 2011“) which, among other things, stated that “GSX Techedu Inc is overstating revenue by up to 70% and should immediately halt trading and launch an internal investigation.”
GSX Techedu investors who purchased, or otherwise acquired, GSX American Depositary Shares and suffered losses greater than $50,000 are encouraged to contact either Michael Yarnoff, Esq., (215) 792-6676, Ext. 804, myarnoff@kehoelawfirm.com, info@kehoelawfirm.com, or John Kehoe, Esq., (215) 792-6676, Ext. 801, jkehoe@kehoelawfirm.com, to discuss potential legal claims.
Citron Research reported the following “takeaways from Citron’s extensive due diligence”:
After tracking >20% of available GSX classes, Citron estimates that 2019 revenue was overstated by 70%[;]
[Citron’s] data indicates that most students are not from lower-tier cities, as GSX claims, when trying to explain how the company can grow so quickly when most Chinese parents in Tier 1 and 2 cities have never heard of them[;]
Wuhan and the surrounding area make up almost 50% of the student composition in Q1 2020, which further supports [Citron’s] thesis that a large % of revenues are fudged given the large number of free classes offered to students of Wuhan during the Covid-19 crisis and, just as importantly, implies that GSX couldn’t have a strong diversified student base to begin with, and that the previous sales revenues are largely exaggerated[;]
Duplicated classes (i.e., counted more than once) could be one way that revenues are inflated[;]
GSX management has deflected criticism with unconvincing explanations that show a greater interest in protecting their stock price than operational integrity, and their filings are riddled with suspicious transactions[.] [Emphasis added]
On this news, GSX Techedu’s American Depositary Share price fell sharply during intra-day trading on unusually high trading volume, thereby damaging investors.
Kehoe Law Firm, P.C., with offices in New York and Philadelphia, is a multidisciplinary, plaintiff–side law firm dedicated to protecting investors from securities fraud, breaches of fiduciary duties, and corporate misconduct. Combined, the partners at Kehoe Law Firm have served as Lead Counsel or Co-Lead Counsel in cases that have recovered more than $10 billion on behalf of institutional and individual investors.
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