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Why GSX Techedu Stock Is Jumping 9% Today

By Rich Duprey - Apr 26, 2021 at 1:25PM

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It's certainly not because of anything the company said in its own defense.

What happened

Shares of GSX Techedu (GOTU 0.00%) were 9% higher in midday trading Monday on no news that really should have caused the stock to rise. It filed its annual report with the Securities and Exchange Commission (it reported results back in early March) and announced it was changing its stock ticker symbol on the NYSE from GSX to GOTU.

So what

If nothing else, it is a curious market reaction to the company's SEC filing because it acknowledges its stock is often under attack from short-sellers like Muddy Waters, which contends most of the users of the Chinese distance-learning platform are robots.

Male smiling at glowing smartphone

Image source: Getty Images.

Yet instead of a full-throated denial that such is the case, GSX offers up a rather tepid "Regardless of whether such allegations are proven to be true or untrue," which certainly sounds like it is leaving open the door to the possibility that the allegations could be proved.

No matter, the company says it will be forced to spend a lot of money defending itself either way, and that's going to make its stock subject to excessive volatility.

Now what

Short-sellers and the investors betting on the stocks under attack have been the subject of much discussion this year as retail investors have launched sustained countermeasures against these institutional naysayers.

GSX Techedu has been subject to wild swings in price for some time, and it looks like it will continue to be for the foreseeable future.

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