Is Gaotu (NYSE:GOTU) outlook still optimistic?

GOTU
 Stock
  

USD 1.21  0.03  2.54%   

While some traders are getting carried away by overanalyzing consumer defensive space, it is reasonable to review Gaotu Techedu against current market trends. As expected, Gaotu Techedu is starting to reaffirm its true potential as private investors are becoming more and more confident in the future outlook. Large number of the gravitations of the company stock price movements has been a demonstration of what is happening in the market overall. Uncertain basic indicators of the firm may also call for signs of mid-term losses for Gaotu private investors. The stock is currently undergoing a very aggressive trading activities.
Published over three months ago
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The company's average rating is Strong Sell from 3 analysts. Do analysts base this consensus on technical analyses? We know that typical technical analysis utilizes price momentum, patterns, and trends looking at historical prices. It aims to identify signals based on Gaotu Techedu market sentiment investors' perception of the future value of Gaotu. Let us look at a few aspects of Gaotu technical analysis.
Using predictive technical analysis, we will analyze different prices and returns patterns and diagnose historical swings to determine the real value of Gaotu Techedu. In general, we focus on analyzing Gaotu Techedu stock price patterns and their correlations with different microeconomic environment and drivers. We also apply predictive analytics to build Gaotu Techedu's daily price indicators and compare them against related drivers such as momentum indicators and various other types of predictive indicators. Using this methodology combined with a more conventional technical analysis and fundamental analysis, we attempt to find the most accurate representation of Gaotu Techedu's intrinsic value. In addition to deriving basic predictive indicators for Gaotu Techedu, we also check how macroeconomic factors affect Gaotu Techedu price patterns. Please read more on our technical analysis page or use our predictive modules below to complement your research.
Sophisticated investors, who have witnessed many market ups and downs, frequently view the market will even out over time. This tendency of Gaotu Techedu's price to converge to an average value over time is called mean reversion. However, historically, high market prices usually discourage investors that believe in mean reversion to invest, while low prices are viewed as an opportunity to buy. Please use the tools below to analyze the current value of Gaotu Techedu in the context of predictive analytics.
Please note, it is not enough to conduct a financial or market analysis of a single entity such as Gaotu Techedu. Your research has to be compared to or analyzed against Gaotu Techedu's peers to derive any actionable benefits. When done correctly, Gaotu Techedu's competitive analysis will give you plenty of quantitative and qualitative data to validate your investment decisions or develop an entirely new strategy towards taking a position in Gaotu Techedu.

Watch out for price decline

Please consider monitoring Gaotu Techedu on a daily basis if you are holding a position in it. Gaotu Techedu is trading at a penny-stock level, and the possibility of delisting is much higher compared to other stocks. However, just because the stock is trading under one dollar, does not mean it will be marked for deletion. Most exchanges require public instruments, such as Gaotu Techedu stock to be traded above the $1 level to remain listed. If Gaotu Techedu stock price falls below $1 for 30 consecutive trading days, the exchange can delist it. Once the company reaches this point, they will be sent an initial price violation notice directly from an exchange.

How important is Gaotu Techedu's Liquidity

Gaotu Techedu financial leverage refers to using borrowed capital as a funding source to finance Gaotu Techedu ongoing operations. It is usually used to expand the firm's asset base and generate returns on borrowed capital. Gaotu Techedu financial leverage is typically calculated by taking the company's all interest-bearing debt and dividing it by total capital. So the higher the debt-to-capital ratio (i.e., financial leverage), the riskier the company. Please check the breakdown between Gaotu Techedu's total debt and its cash.

How does Gaotu utilize its cash?

To perform a cash flow analysis of Gaotu Techedu, investors first need to understand how to read the cash flow statement. A cash flow statement shows the amount of cash Gaotu Techedu is receiving and how much cash it distributes out in a given period. The Gaotu Techedu cash flow statement breaks down these inflows and outflows into different buckets, including operating activities, investing activities, and financing activities.

Detailed Perspective On Gaotu Techedu

Gaotu Techedu has a beta of 1.8535. Let's try to break down what Gaotu's beta means in this case. As the market becomes more bullish, returns on owning Gaotu Techedu are expected to decrease slowly. On the other hand, during market turmoil, Gaotu Techedu is expected to outperform it slightly. The beta indicator helps investors understand whether Gaotu Techedu moves in the same direction as the rest of the market, and how volatile (i.e., risky) it is compared to the market (i.e., selected benchmark). In other words, if Gaotu deviates very little from the market, it does not add much risk to the portfolio, but it also doesn't increase the expected returns. The entity reported the previous year's revenue of 6.56 B. Net Loss for the year was (3.1 B) with profit before overhead, payroll, taxes, and interest of 4.16 B.

Can Gaotu Techedu build up on the newest gain?

Gaotu Techedu risk adjusted performance is up to 0.0. Gaotu Techedu is displaying above-average volatility over the selected time horizon. Investors should scrutinize Gaotu Techedu independently to ensure intended market timing strategies are aligned with expectations about Gaotu Techedu volatility. Understanding different market volatility trends often help investors to time the market. Properly using volatility indicators enable traders to measure Gaotu Techedu's stock risk against market volatility during both bullying and bearish trends. The higher level of volatility that comes with bear markets can directly impact Gaotu Techedu's stock price while adding stress to investors as they watch their shares' value plummet. This usually forces investors to rebalance their portfolios by buying different stocks as prices fall.

Gaotu Techedu Implied Volatility

Gaotu Techedu's implied volatility exposes the market's sentiment of Gaotu Techedu stock's possible movements over time. However, it does not forecast the overall direction of its price. In a nutshell, if Gaotu Techedu's implied volatility is high, the market thinks the stock has potential for high price swings in either direction. On the other hand, the low implied volatility suggests that Gaotu Techedu stock will not fluctuate a lot when Gaotu Techedu's options are near their expiration.

Our Final Take On Gaotu Techedu

Whereas other entities within the education & training services industry are still a little expensive, even after the recent corrections, Gaotu Techedu may offer a potential longer-term growth to private investors. To conclude, as of the 3rd of June 2022, our final 90 days buy-or-sell advice on the firm is Strong Sell. However, we believe Gaotu Techedu is undervalued with quite high probability of distress for the next two years.

Editorial Staff

This story should be regarded as informational only and should not be considered a solicitation to sell or buy any financial products. Macroaxis does not express any opinion as to the present or future value of any investments referred to in this post. This post may not be reproduced without the consent of Macroaxis LLC. Macroaxis LLC and Gabriel Shpitalnik do not own shares of Gaotu Techedu. Please refer to our Terms of Use for any information regarding our disclosure principles.

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