Citron calls GSX ‘worst Chinese fraud since 2011,’ says up to 70% of sales fake

Shares of GSX Techedu (GSX) are in the spotlight after short seller Citron Research calls it “the most blatant Chinese stock fraud since 2011,” and says up to 70% of the company’s revenues are “fabricated.” GSX SHOULD BE HALTED, INVESTIGATED: Noting that Luckin Coffee’s (LK) “cautionary tale teaches us several valuable lessons” such as “if it seems too good to be true, it is,” Andrew Left’s Citron Research called GSX “the most blatant Chinese stock fraud since 2011” and claimed that up to 70% of the company’s revenues are fabricated. “GSX Techedu Inc is overstating revenue by up to 70% and should immediately halt trading and launch an internal investigation,” the short seller said in a newly published report. “They are not even in a ‘fake it till you make it’ situation. Their forward growth trajectory is as foolish and fraudulent as their previous financials.” As a result of its investigation, Citron “calls on the internal audit team at GSX to look into student enrollment numbers and revenue more closely. Our research suggests a huge discrepancy between reported figures and reality.” PRICE ACTION: In morning trading, shares of GSX have dropped over 8% to $29.