Gaotu Techedu Inc ADR (GOTU)

Gaotu Techedu Inc ADR (GOTU) stock dropped by 7.92% due to regulatory concerns in China's gaming sector, similar to those faced by the for-profit education industry in 2021.

• Regulatory Background: In 2021, China implemented regulations to curb spending in the for-profit education sector, leading to a sharp decline in stock prices for companies like Gaotu Techedu.
• Regulatory Focus on Gaming: China's National Press and Publication Administration has released draft rules to address concerns about excessive gaming by Chinese youth. These rules aim to restrict incentives that encourage more gaming and spending.
• Proposed Restrictions: The proposed restrictions include curbing minors' participation in gaming-related lotteries, banning tipping of game livestream hosts by minors, eliminating discounts for in-game purchases, and discontinuing rewards for daily log-ins.
• Continued Regulatory Efforts: These actions are part of a broader effort by Chinese regulators to establish rules governing how children spend their time, similar to their previous actions to limit gaming during school weeks.

Shares of Gaotu Techedu Inc ADR (GOTU) dropped by 4.04% from $2.72 to $2.61 in the trading on Wednesday, November 22, 2023. The reason why GOTU is down today is due to weaker-than-expected third-quarter results. For the third quarter of the year, Gaotu Techedu Inc. reported sales of CNY 789.41 million compared to CNY 606.17 million in the same period the previous year. However, despite the increase in sales, the company reported a net loss of CNY 57.66 million, compared to a net loss of CNY 61.35 million in the previous year's third quarter. Basic loss per share from continuing operations was reported as CNY 0.22 compared to CNY 0.24 in the same period the previous year. Diluted loss per share from continuing operations was also CNY 0.22, compared to CNY 0.24 in the previous year.