Insights

Why New Oriental Education, TAL Eduction, and Gaotu Techedu Popped Today

What happened

Shares of New Oriental Education & Technology Group (NYSE: EDU), TAL Education Group (NYSE: TAL), and Gaotu Techedu (NYSE: GOTU) — all for-profit Chinese education stocks — were rising today, likely for two reasons. 

First, an analyst’s positive note for New Oriental sent shares higher yesterday and likely helped it continue climbing today, while helping its rivals’ stocks jump as well. 

Second, recent reports have highlighted that for-profit education companies, including New Oriental, have begun incorporating e-commerce sales on their technology platforms in an effort to stay afloat after the Chinese government cracked down on the for-profit education sector. 

New Oriental was up by 23.2%, TAL Education had gained 13%, and Gaotu Techedu was up by 14.5% as of 12:30 p.m. ET. 

So what 

Yesterday, J.P. Morgan analyst DS Kim upgraded New Oriental Education to overweight from neutral and raised the stock’s price target to $24, up from $14. Kim said the stock “looks really cheap” and that investors are “literally being paid to wait” until the company completes its restructuring. 

Image source: Getty Images.

That positive sentiment sent New Orientals’ share price rising yesterday, and it’s likely that investors are pushing the stock higher again as they process Kim’s comments. 

The positive comments about New Oriental’s business are also having a spillover effect on TAL Education and Gaotu Techedu.

All of these companies have suffered huge share price losses after the government implemented restrictions on online education and tutoring in the country last year. So investors in all of these companies are latching onto Kim’s comments and applying them to TAL Education and Gaotu Techedu as well. 

Additionally, over the past few days, New Oriental has received attention for incorporating e-commerce into its learning platform. Some educators on the platform have begun selling products on the platform, using both English and Chinese, in an effort to make money and teach English at the same time. 

Over the weekend New Oriental said its daily sales volume had grown by 10 times over the past few days. Some of the live videos have gone viral recently and it’s caused some investors to believe these education companies could transition further into e-commerce.

Now what 

While it’s good to see the share prices of New Oriental, TAL Education, and Gaotu Techedu rise today, investors should remember that the future of these companies is still uncertain as they try to transition to new business models. 

Even if they are successful in implementing some e-commerce opportunities, it doesn’t necessarily mean they’ll be successful with their online sales.

The huge share price gains for each company today are a good reminder that these stocks are very volatile right now. And with investors still trying to decipher if New Oriental, TAL Education, and Gaotu Techedu can adapt to China’s shifting education sector, it’s likely that these companies will continue to experience significant share price swings in the short term. 

JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Chris Neiger has no position in any of the stocks mentioned. The Motley Fool recommends New Oriental Education & Technology Group and TAL Education Group. The Motley Fool has a disclosure policy.

Trade The World Anywhere & Anytime!

Mobile app platform with over 50,000 global listed securities across 12 markets (over 70% global market capitalisation), right from your Android or iOS device.

Integrated with exclusive trading idea and investment analysis tools to help you find actionable insight on virtually every financial instrument across our 12 global markets, to help you optimise your trading strategies.

Refer Your Friends

Tell your friends about Monex and gift them FREE access to our trading tools.

  • This field is for validation purposes and should be left unchanged.

We respect your privacy and will only send this one email notification to your friends. 

Share With Your Friends

Free Share Allocation Reward Levels

STARTER

Class
$ 2,500 Deposit & Trade
  • REWARD^
  • 1 x Marathon Oil Corporation (NYSE:MRO)

ECONOMY

Basic
$ 5,000 Deposit & Trade
  • REWARD^
  • 1 x Pfizer Inc (NASDAQ:PFE)

ECONOMY

Standard
$ 10,000 Deposit & Trade
  • REWARD^
  • 1 x Amazon.com Inc (NASDAQ:AMZN)

ECONOMY

Plus
$ 25,000 Deposit & Trade
  • REWARD^
  • 2 x Apple Inc (NASDAQ:AAPL)
POPULAR

BUSINESS

Class
$ 50,000 Deposit & Trade
  • REWARD^
  • 4 x Apple Inc (NASDAQ:AAPL)

FIRST

Class
$ 150,000 Deposit & Trade
  • REWARD CHOICES^
  • 12 x Apple Inc (NASDAQ:AAPL)
  • 2 x Tesla (NASDAQ:TSLA)
^Please refer to the Free Share Promotion Terms and Conditions for details.

Monex Trading Tools Access and Usage Terms

The Monex Trading Tools (referred to as ‘tools’ hereafter) are available to you inside your client portal;

To activate access to the tools, you must have a verified and approved trading account and have made a deposit of at least AUD $1000.

An active and funded account with a positive trading balance is required to continue to have access to the tools;

Although the tools are available to you, Monex Securities may at it’s discretion disable access to the tools in the future;

Monex Securities reserves the right to change these terms and conditions from time to time, as it sees fit, without notice.

FREE AAPL, TSLA, AMZN, PFE or MRO Share(s)
REGISTER TO BE ELIGIBLE FOR FREE SHARES
TRAVEL ACROSS THE FINANCIAL WORLD
Act Fast - Promotion Ends In
Click Here To Get Started
FREE AAPL, TSLA, AMZN, PFE or MRO Share(s)
REGISTER TO BE ELIGIBLE FOR FREE SHARES
TRAVEL ACROSS THE FINANCIAL WORLD
Act Fast - Promotion Ends In
Click Here For More Info