The stock that sold for $10.50 in 2019 hit $149.05 in January 2021, then fell to $2.40 six months later. Gaotu, first called GSX Techedu, ran live online classes for Chinese students from kindergarten through high school. One star teacher lectured thousands of children at once. A team of tutors answered each child's questions during and after class. In 2018 China's online large-class tutoring market had grown to $2.2 billion in gross billings.

Big Classes, Small Attention

Larry Xiangdong Chen founded the company's main operating business in Beijing in June 2014. Its platform, Genshuixue, also sold foreign language and professional courses to adults. The bet was that one great teacher could reach more students online than in any classroom, while tutors kept each child on track. GSX charged more than most rivals for its K-12 large classes. Chen controlled 89.8 percent of the votes after the offering.

Short Sellers and a Ban

GSX sold 19.8 million American depositary shares at $10.50 in June 2019 and listed on the New York Stock Exchange. In 2020 more than a dozen research reports, including one from Muddy Waters, accused it of inflating revenue, and the SEC opened an investigation. In July 2021 Beijing banned for-profit tutoring in core school subjects. The company renamed itself Gaotu in 2021. It still trades on the NYSE as GOTU.

Cover: The Ten Great Disciples of Confucius (Komon jittetsu), from the series "A Set of Ten Famous Numbers for the Katsushika Circle (Katsushikaren meisu juban)", Yashima Gakutei. Art Institute of Chicago, public domain. Chosen for a teacher among his disciples (live classes).