Muddy Waters Joins Short Sellers Pounding Away at GSX

To some short sellers, GSX Techedu Inc. is an “almost completely empty box,” with numbers that are too good to be true, Bloomberg News reported. To many analysts -- including those at Credit Suisse Group AG, which led the company’s initial public offering -- the Chinese online education firm remains a buy, and detractors just don’t understand the business model. GSX is an after-school tutoring platform whose American depositary receipts began trading last June and had more than quadrupled earlier this year, boosting the fortune of billionaire chairman and founder Larry Chen. Then, in late February, Grizzly Research started questioning GSX’s results. Citron Research followed in April, accusing the company of overstating revenue by as much as 70%. In early May, Scorpio VC concluded the financial data “is not up to the test.” Read more

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