Although education stocks are not the most popular, the pandemic has offered companies the opportunity to take advantage of the growth of online learning. The Evergrande crisis has also hit Chinese companies particularly hard creating a potential investment opportunity for some investors. With this in mind, Meten Holding Company ltd. (NASDAQ: METX) has caught investors’ attention as it moves away from its primary business of offering English language courses across China. In recent months the company has made a series of announcements signaling that it is branching out into blockchain, NFTs, and crypto mining. This resulted in a 33% increase on October 25th as many investors anticipate METX will breakout soon.
Founded in 2006, METX offers English programs through its sophisticated digital platform and nationwide network of learning centers in China. Among its strengths is the application of AI-driven centralized teaching and management systems, which is quite unique in education stocks. METX has done well for itself considering the demand in China for English courses. As quality of life improved across the board and the Chinese job market developed with a focus on English, METX grew its operation to over 600 cities. According to the Mckinsey Institute, China’s urban population will reach 1 billion by 2030. If demand for English courses continues, then METX could be poised for huge growth relative to other education stocks.
However, the company has been “exploring the feasibility of blockchain and cryptocurrency business” since 2020. In September, METX announced a New Business Initiative pursuing a Dogecoin reward mechanism and developing NFT for digital copyright in online education. While METX is currently searching for purchasing opportunities for mining machines and NFT assets to operate in the US or Canada, the company’s CEO – Alan Peng – has clarified that these plans for expansion will not overtake the company’s core business in the field of education. Coincidently, Alan Peng is also an advisor for the SPAC EdTechX Holdings (NASDAQ: EDTXU) which similarly supports the “digitization of education and digital inclusion in education”.
Education companies have been hit hard by government restrictions which cracked down on China’s lucrative private tutoring sector. Once valued at more than $100 billion, the industry has since tanked thanks to a year of Covid restrictions as well. With this in mind, METX’s pivot and potential interest in relocating could be a good business decision for the company.
While METX has underperformed this year, many investors are seeing a buy opportunity. The company reported an 8.2% YOY increase in revenue – attributed mainly to the fading impact of COVID-19 – and increased operational efficiency resulting in a 23.4% YOY increase in gross profits. Surprisingly, short volume has decreased by 23% from August to September. METX witnessed a huge surge in volume on October 25th, with 237 million traded in comparison to its average volume of 23.4 million.
@RealTimeTradez Could be very interesting…
METX peaked at .4078 but has passed this resistance pre-market moving its resistance to .43.The stock is currently trading at $0.41 and has a primary support .3343 with a weaker support at .38. Accumulation has dropped but the MACD has had a bullish crossover and remains on the upside. The RSI is now at 67 as the PPS shoots up pre-market.
Should You Buy?
While METX has bled out over the year, the company retains significant assets and shows considerable potential as it moves into the crypto and blockchain sphere. The company has been exploring this move for some time which is a bullish indication since METX has weighed the value of this sphere before making its final decision. As an early-mover, METX could benefit from this developing technology’s uses in education.
In the short-term, METX has lost enough value that now could present a good entry point into this education stock. Investors are looking to fill the gap formed by a severe sell off in early September between .53 and .70. Given the surge in volume and the technical play on METX, some investors are giving a price target of .7 to $1 once it breaks through its resistance. The bullish sentiment surrounding METX definitely makes it an education stock to watch.
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