Gaotu Techedu (GOTU) AI Stock Analysis

• Market Cap: $565.09M
• Dividend Yield: N/A
• Average Volume (3M): 581.38K
• Price to Earnings (P/E): ―
• Beta (1Y): 0.92
• Revenue Growth: 48.81%
• EPS Growth: 61.64%
• Country: US
• Employees: 14,381
• Sector: Consumer Defensive
• Sector Strength: 42
• Industry: Education & Training Services
• EPS (TTM): -0.09
• Shares Outstanding: 142,976,900
• 10 Day Avg. Volume: 475,585
• 30 Day Avg. Volume: 581,381
• PEG Ratio: >-0.01
• Price to Book (P/B): 2.13
• Price to Sales (P/S): 0.90
• P/FCF Ratio: 51.56
• Enterprise Value/Market Cap: 15.32
• Enterprise Value/Revenue: 1.48
• Enterprise Value/Gross Profit: 2.19
• Enterprise Value/Ebitda: -22.93
• 1Y Price Target: $3.20
• Price Target Upside: 33.33% Upside
• Rating Consensus: Hold
• Number of Analyst Covering: 1
• EPS Forecast (FY): -0.24
• Revenue Forecast (FY): $867.74M

• Rating: 49 Neutral
• Price Target: $2.50 ▲(4.17% Upside)

Gaotu Techedu's overall stock score is primarily influenced by its strong revenue growth and strategic focus on AI and service expansion, as discussed in the earnings call. However, persistent profitability challenges, negative valuation metrics, and bearish technical indicators weigh heavily on the score.

Positive Factors

Revenue Growth

Consistent revenue growth indicates strong market demand and effective service expansion, supporting long-term business sustainability.

AI Integration

AI integration enhances service offerings and operational efficiency, providing a competitive edge in the education technology sector.

Learning Services Growth

Strong growth in learning services diversifies revenue streams and strengthens market position, fostering long-term resilience.

Negative Factors

Operating Losses

Persistent operating losses indicate challenges in achieving profitability, which could hinder financial stability and growth potential.

Cash Flow Issues

Significant cash outflows suggest difficulties in generating cash from operations, impacting liquidity and investment capacity.

Profitability Challenges

Negative profit margins highlight ongoing profitability challenges, which could affect long-term financial health and shareholder value.

Gaotu Techedu Business Overview & Revenue Model

Company Description

Gaotu Techedu Inc. is a leading online education platform based in China, primarily focused on providing high-quality educational services to students of all ages. The company offers a diverse range of courses, including K-12 tutoring, professional development, and adult education, utilizing advanced technology to facilitate learning. With a strong emphasis on live interactive classes and personalized learning experiences, Gaotu Techedu aims to enhance academic performance and skill acquisition through its innovative educational solutions.

How the Company Makes Money

Gaotu Techedu generates revenue primarily through its online education services, which include subscription fees for courses and tutoring sessions. The company offers various pricing models, including pay-per-class and monthly subscription plans, catering to different customer segments. Key revenue streams also include sales from supplementary educational materials and resources. The company has established partnerships with educational institutions and technology providers to enhance its course offerings and expand its reach. Furthermore, Gaotu Techedu engages in targeted marketing strategies to attract new students and retain existing ones, contributing significantly to its earnings.

Gaotu Techedu Financial Statement Overview

Summary

Gaotu Techedu shows strong revenue growth and maintains a stable balance sheet with low leverage, but profitability challenges persist as reflected in 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	5.85B	4.62B	2.96B	2.54B	6.48B	6.74B
Gross Profit	3.95B	3.14B	2.17B	1.83B	4.11B	5.07B
EBITDA	-377.51M	-989.99M	65.95M	68.60M	-2.91B	-1.30B
Net Income	-374.43M	-1.06B	-7.30M	13.40M	-3.06B	-1.32B
Balance Sheet
Total Assets	5.11B	5.83B	5.41B	4.88B	5.02B	10.69B
Cash, Cash Equivalents and Short-Term Investments	2.41B	3.17B	2.89B	3.74B	3.50B	7.69B
Total Debt	532.04M	492.24M	188.15M	82.52M	356.05M	796.76M
Total Liabilities	3.70B	3.89B	2.31B	1.78B	2.14B	4.96B
Stockholders Equity	1.41B	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: 2.40
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• 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 2.4 is below the 20-day moving average (MA) of 2.44, below the 50-day MA of 2.72, and below the 200-day MA of 3.32, indicating a bearish trend. The MACD of -0.10 indicates Negative momentum. The RSI at 34.60 is Neutral, neither overbought nor oversold. The STOCH value of 14.97 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
STG	68 Neutral	$75.45M	1.55	51.70%	―	-0.84%	-11.01%
UDMY	68 Neutral	$885.58M	-235.07	-1.78%	―	2.53%	95.79%
TAL	67 Neutral	$6.67B	37.77	4.77%	―	44.37%	146.96%
COUR	63 Neutral	$1.30B	-28.58	-7.43%	―	8.10%	43.35%
Sector *	62 Neutral	$20.33B	14.63	-3.31%	3.23%	1.93%	-12.26%
GOTU	49 Neutral	$565.09M	-11.14	-21.21%	―	48.81%	61.64%
DAO	46 Neutral	$1.01B	54.07	―	―	-1.51%	155.73%

Gaotu Techedu Corporate Events

Gaotu Techedu Reports Improved Q3 2025 Financial Results

Gaotu Techedu announced its unaudited financial results for the third quarter of 2025, showing a significant improvement in financial performance compared to the same period in 2024. The company reported a 30.7% increase in net revenues to RMB1,579.0 million and a reduction in net loss by 68.8% to RMB147.1 million. The results reflect the company’s strategic focus on user needs and efficiency gains, as well as its commitment to shareholder returns, demonstrated by the completion of an $80 million share repurchase program and the initiation of a new $100 million program.