51Talk Falls 11% Despite Turning Profitable and Beating Guidance

Stock falls as U.S. markets tumble. The company remains up significantly from this year's open of $9.69 per share.

Anthony Russo
    Mar 09, 2020 7:35 AM  PT
51Talk Falls 11% Despite Turning Profitable and Beating Guidance
author: Anthony Russo   

The stock of China Online Education Group (NYSE: COE)  plunged nearly 11% to $25.21 per American depositary share in early trading Monday despite the company reporting it beat revenue guidance and turned profitable in the fourth quarter. The U.S. market dropped significantly across the board on cornoavirus fears and falling oil prices. 

The Beijing-based company, also known as 51Talk, said in a statement today that revenues in the three months through December reached $57.2 million, up 34% year-over-year. Net income was $200,000, in contrast to a net loss of $20.15 million in the same period in 2018.

51Talk attributed the revenue growth in the fourth quarter to its number of active students, which hit 257,200, representing a year-over-year increase of 20%. With the coronavirus keeping people home, the online education company has been the beneficiary.

"Over the past two months, Chinese citizens have displayed tremendous courage and resilience while facing the numerous challenges presented by the coronavirus epidemic. From an educational standpoint, as school campuses have remained closed, hundreds of millions of students and teachers have turned to online platforms in an effort to maintain educational continuity," Jack Jiajia Huang, the founder, chairman and chief executive officer of 51Talk, said in a statement today.

He added, "We believe that an even deeper and long-lasting awareness of the power of online education has developed, especially in lower-tier cities."
Despite today's fall, 51Talk hit a four year high of $37.19 per share in February. 

That marks the highest it has traded following its IPO in June 2016, when it raised $45.6 million. However, since that day, 51Talk's stock has not exceeded trading $30 per share but is still up significantly from the year's open at $9.69 per share.

Founded in 2011, 51Talk provides K-12 English lessons to students in China and internationally. 51Talk uses a group class service called HAWO to connect teachers and students for classes.
Looking ahead, 51Talk said it expects to generate revenue in the range of $64.76 million and $65.48 million in the first quarter, representing year-over-year growth of between approximately 39% and 41%.