Gaotu Techedu (GOTU) AI Stock Analysis

• Market Cap: $826.06M
• Dividend Yield: N/A
• Average Volume (3M): 834.88K
• Price to Earnings (P/E): ―
• Beta (1Y): 1.20
• Revenue Growth: 56.38%
• EPS Growth: -16.84%
• Country: US
• Employees: 14,381
• Sector: Consumer Defensive
• Sector Strength: 42
• Industry: Education & Training Services
• EPS (TTM): -0.12
• Shares Outstanding: 142,976,900
• 10 Day Avg. Volume: 756,788
• 30 Day Avg. Volume: 834,879
• PEG Ratio: N/A
• Price to Book (P/B): N/A
• Price to Sales (P/S): N/A
• P/FCF Ratio: N/A
• Enterprise Value/Market Cap: 0.57
• Enterprise Value/Revenue: 0.09
• Enterprise Value/Gross Profit: 0.14
• Enterprise Value/Ebitda: -0.45
• 1Y Price Target: $3.50
• Price Target Upside: 9.03% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 0

• Rating: 52 Neutral
• Price Target: $3.50 ▲(9.03% Upside)

Gaotu Techedu's overall stock score is primarily driven by its strong revenue growth and strategic advancements in AI, as highlighted in the earnings call. However, ongoing profitability challenges and a negative P/E ratio weigh down the score. Technical indicators suggest a neutral market sentiment, with no strong momentum in either direction.

Positive Factors

Revenue Growth

Strong revenue growth indicates successful market penetration and product adoption, enhancing Gaotu's competitive position in the education sector.

AI Integration

AI integration strengthens Gaotu's educational offerings, providing personalized learning experiences and maintaining technological leadership.

Cash Flow Improvement

Improved cash flow enhances financial flexibility, supporting future investments and operational stability, crucial for long-term growth.

Negative Factors

Operating and Net Losses

Continued losses highlight profitability challenges, potentially impacting Gaotu's ability to sustain operations without external funding.

Decrease in Gross Margin

A declining gross margin suggests increased cost pressures, which could erode profitability if not managed effectively.

General and Administrative Expenses

Rising administrative costs may strain financial resources, necessitating efficiency improvements to maintain financial health.

Gaotu Techedu Business Overview & Revenue Model

Company Description

Gaotu Techedu Inc., a technology-driven education company, provides online K-12 after-school tutoring services in the People's Republic of China. Its K-12 after-school tutoring courses cover various K-12 academic subjects, including mathematics, English, Chinese, physics, chemistry, biology, history, geography, and political science. The company also provides foreign language courses comprising English and Japanese, as well as English test preparation courses for students taking post-graduate entrance exams; and professional courses primarily for working adults preparing for professional qualification exams, such as teacher's qualification, the Chartered Financial Analyst designation, securities qualification exams, and other exams. In addition, it offers admission courses for admission tests, including national graduate entrance examination, civil service examinations, and others; and Gaotu App, an interactive learning app to various student groups. Further, the company provides other courses, including offline business consulting courses to enhance management skills for principals and other officers of private education institutions; and develops and sells smart devices, such as multi-function translation pen, as well as teaching and learning tools, which includes smart learning machine. The company was formerly known as GSX Techedu Inc. and changed its name to Gaotu Techedu Inc. in June 2021. Gaotu Techedu Inc. was incorporated in 2014 and is headquartered in Beijing, the People's Republic of China.

How the Company Makes Money

Gaotu Techedu generates revenue primarily through tuition fees from its online courses and educational services. The company offers various subscription models, including one-time purchases for specific courses and recurring fees for ongoing access to a suite of educational resources. Additionally, Gaotu has partnerships with schools and educational institutions, providing them with technology and content, which further contributes to its revenue. The company's emphasis on scalable online learning and its ability to attract a large user base play a significant role in its overall earnings.

Gaotu Techedu Financial Statement Overview

Summary

Gaotu Techedu shows strong revenue growth and maintains a stable balance sheet with low leverage. However, profitability challenges persist with negative margins and cash flow issues. The company must focus on improving operational efficiency and cash generation to enhance financial health.

Income Statement

Gaotu Techedu has experienced significant revenue growth from 2023 to 2024, with a revenue increase of 53.8%. However, the company remains unprofitable, as indicated by negative EBIT and net income margins. The net profit margin stands at -23.0%, and the EBIT margin is -25.9%. Although gross profit margins are healthy at 68.1%, the overall profitability is affected by high operating costs.

Balance Sheet

The company has a solid equity base with an equity ratio of 33.2%, indicating a stable financial structure. The debt-to-equity ratio is low at 0.25, reflecting conservative leverage. However, the return on equity is negative due to ongoing losses, posing a risk to shareholder value. Cash reserves remain strong, supporting liquidity.

Cash Flow

Gaotu Techedu's cash flow position is weak, with zero free and operating cash flow reported for 2024. Despite improvements in operating cash flow in 2023, the lack of free cash flow growth and zero cash flow in the latest period raise concerns about the company's ability to generate cash from operations.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	5.10B	4.55B	2.96B	2.50B	6.56B	7.12B
Gross Profit	3.46B	3.10B	2.17B	1.80B	4.16B	5.36B
EBITDA	-1.06B	-1.13B	-94.76M	-47.30M	-2.83B	-1.70B
Net Income	-912.67M	-1.05B	-7.30M	13.17M	-3.10B	-1.39B
Balance Sheet
Total Assets	5.19B	5.83B	5.41B	4.88B	5.02B	10.69B
Cash, Cash Equivalents and Short-Term Investments	2.44B	3.17B	2.89B	3.74B	3.50B	7.69B
Total Debt	479.67M	492.24M	188.15M	82.52M	356.05M	796.76M
Total Liabilities	3.25B	3.89B	2.31B	1.78B	2.14B	4.96B
Stockholders Equity	1.93B	1.93B	3.11B	3.10B	2.88B	5.73B
Cash Flow
Free Cash Flow	0.00	79.79M	312.90M	243.88M	-4.46B	319.20M
Operating Cash Flow	0.00	258.01M	353.70M	373.74M	-4.19B	603.27M
Investing Cash Flow	0.00	620.82M	-423.98M	-1.09B	4.81B	-5.60B
Financing Cash Flow	0.00	-205.30M	-90.48M	0.00	-100.61M	5.27B

Gaotu Techedu Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 3.21
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Positive
• RSI: Positive
• STOCH: Positive

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For GOTU, the sentiment is Negative. The current price of 3.21 is below the 20-day moving average (MA) of 3.57, below the 50-day MA of 3.64, and below the 200-day MA of 3.21, indicating a bearish trend. The MACD of -0.10 indicates Positive momentum. The RSI at 29.27 is Positive, neither overbought nor oversold. The STOCH value of 5.48 is Positive, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for GOTU.

Gaotu Techedu Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
TAL	75 Outperform	6.81B	65.92	2.25%	―	48.03%	97.15%
STG	73 Outperform	107.97M	2.24	56.89%	―	-3.74%	-26.52%
COUR	70 Neutral	1.92B	-36.72	-13.31%	―	7.10%	49.18%
UDMY	64 Neutral	1.06B	-34.01	-13.13%	―	3.93%	63.52%
DAO	58 Neutral	1.13B	35.44	-3.84%	―	-1.66%	―
GOTU	52 Neutral	$826.06M	―	-32.95%	―	56.38%	-16.84%
Sector *	62 Neutral	$20.33B	14.63	-3.31%	3.23%	1.93%	-12.26%

Gaotu Techedu Corporate Events

Gaotu Techedu Reports Strong Q2 2025 Financial Results

Gaotu Techedu reported its unaudited financial results for the second quarter of 2025, showing a significant improvement in financial performance compared to the same period in 2024. The company achieved a 37.6% increase in net revenues to RMB1,389.4 million and a 36.2% rise in gross billings to RMB2,252.4 million. Loss from operations and net loss both narrowed significantly, reflecting improved operational efficiency and cost management. The results highlight Gaotu’s ability to sustain growth while enhancing operational quality, positioning it strongly in the education technology sector.