Meten EdtechX Education Group Ltd (NASDAQ: METX) is screaming for the market this morning, and for good reason. The company announced significant growth in revenue in January and is expecting more of the same ahead. Here’s what’s going on:
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- Meten EdtechX Education Group Climbs on Revenue Growth
- Risks to Consider Before Buying METX Stock
- Final Thoughts
Meten EdtechX Education Group Climbs on Revenue Growth
As mentioned above, Meten EdtechX Education Group is flying in the market this morning after announcing significant revenue growth in the month of January. The company is a leading omnichannel English language training service provider in China, and it seems as though demand for these services is climbing in a big way.
In the release, METX said that both gross billings and student enrollment are climbing. In fact, in January, gross billings were up 238% and student enrollment was up 192% on a year over year basis.
METX went on to point to its competitive advantage in geographical coverage brought about by its nationwide network of more than 100 learning centers. The company explained that growth also had to do with quality teaching and strong brand recognition leading to increases in renewal and referral rates and reducing the overall customer acquisition cost.
Moving forward, Meten EdtechX Education Group said it will continue to strengthen its R&D capabilities and optimize its business structure. Moreover, the company said that it expects to maintain the strong momentum in growth as the Chinese economy continues to recover from the COVID-19 pandemic.
Risks to Consider Before Buying METX Stock
If you’re considering making an investment in METX stock, there are a few risks that you should think about. After all, any investment you make will come with risk. When it comes to Meten EdtechX Education Group, the most significant risks to consider include:
- Profitability. While METX is seeing strong growth in enrollment and gross billings, the company is still far from profitable. Without profits, the company relies on the cash on its balance sheet, but if that doesn’t last, dilutive offerings may be to come, coupled with potentially significant declines.
- Emerging. Meten EdtechX Education Group operates in China, an emerging economy. Investing in emerging economies comes with increased risk as these emerging economies often hit bumps in the road.
- Penny Stock. Finally, METX is a penny stock. Stocks in this category are known to experience heavy levels of volatility, which could result in significant declines if trades are not timed properly.
Sure, there are plenty of risks to consider in terms of METX. However, for many, those risks are outweighed by the potential growth. The fact of the matter is that China’s economy is emerging quickly, leading to rapid growth across various segments, including education, in the region.
Moreover, smaller language learning centers in China were likely pushed out of business during the COVID-19 pandemic, and Meten EdtechX Education Group believes it can tap into that audience, maintaining extreme growth.
With such strong growth, profitability may be around the corner, coupled by more significant gains in value.