July 9, 2020
I hereby submit that GSX Techedu Inc. is a fraudulent company that does not have staff commensurate to its filings to the SEC or compared to its valuation.
One thing that all online businesses have in common is that their staff tend to be highly educated, sophisticated and frequent online users who leave a 'digital footprint' that is easily discoverable.
By doing a search of similar Chinese companies in online education using the business platform LinkedIn shows massive discrepancies in staff size between GSX and its competitors listed on NYSE/NASDAQ.
(Please note this is not expected to exactly replicate staff numbers as a small percentage of people may not have a LinkedIn profile).
Profiles on LinkedIn compared to valuation - value per staff member as listed:
TEDU: 465 profiles --- $88.34M --- $190k
GSX: 130 profiles --- $18.65B --- $143m
EDU: 8575 profiles --- $22.43B --- $2.62m
TAL: 4701 profiles --- $43.88B --- $9.34m
Using Alibaba and Google as a control:
BABA: 67,461 profiles --- $658.445B --- $9.76m
GOOG: 206,994 profiles -- $1,024,000,000,000 -- $4.95m
In order to allow GSX to trade on the NYSE, the SEC has to believe that it has a business which is 14 x more valuable per staff member than TAL and BABA, 30 x Google, nearly 70 x that of EDU and 700 x that of TEDU.
It is not possible.
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The Mystery of GSX Missing Tutors - Fraudulent Filings to the SEC
Using their own filing to the SEC GSX state:
'As of March 31, 2019, we had 169 instructors and 522 tutors.'
In the December 2019 Annual report to the SEC they state: 'As of the end of 2019, we have 3736 tutors and 232 instructors'
According to $GSX they added 3214 Tutors and 63 instructors over an 8 month period, hiring over 400 a month and mysteriously changing the ratio from 1:3 to 1:16.
As someone who works in education and with a long background of recruitment. This is an incredible feat when in their own words 'we meticulously evaluated and employed less than 2% of the candidates'.
If we are to believe their own numbers. GSX should have grown by a further 400 tutors a month since December. Meaning that they now have circa 5,614 Tutors.
Using LinkedIn again and its Chinese counterpart MaiMai I found a total of 70 profiles (combined) who were involved in teaching for $GSX.
This means that their online educational tutors left a digital footprint of 1.24%.
This figure is absolutely nonsensical for an online business.
The SEC should request submission of GSX Techedu's roster of Instructors and Tutors which they should be able to provide immediately.
Yours Sincerely
Thomas Forrest