EDU Plummets on Potential Non-Profit Law

In response, J.P. Morgan Securities downgraded the stock

Deputy Editor
Jul 23, 2021 at 10:17 AM
facebook twitter linkedin

The shares of New Oriental Education & Technology Group Inc (NYSE:EDU) are taking a nosedive into penny stock territory, after news broke that China is considering making companies that offer tutoring services on school curriculum go non-profit, affecting a vast industry. EDU is down 65.6% at $2.20, firmly into the short sell restricted list and a far cry from its Feb. 16  record peak of $19.97. 

EDU has plunged on the charts since the start of May, guided lower by the descending 20-day moving average. Today's steep drop, however, has the equity at its lowest level in roughly six years. Coincidentally, the equity was down 65.6% year-to-date heading into Friday -- the same deficit it's already experiencing in today's session. 

In response, J.P. Morgan Securities downgraded the stock to "underweight" from "overweight," with a large price-target cut to $3.50 from $19. There is plenty of room for further bear notes, as coming into today, four of the five analysts in coverage carried a "strong buy" rating on EDU. Plus, the 12-month consensus price target of $15.84 is a drastic premium to current levels. 

The options pits have been similarly bullish. EDU's 50-day call/put volume ratio of 3.50 at the International Securities Exchange (ISE), Cboe Options Exchange (CBOE), and NASDAQ OMX PHLX (PHLX) stands higher than all but 1% of readings from this past year. This means long calls have been picked up at a much faster-than-usual rate in the last 10 weeks. 


If you are not making money with options, you aren’t buying options like this…

There is no options strategy that more perfectly approaches trading the fastest moving and most volatile stocks available in the marketplace than this one. In fact, there is no strategy that better utilizes put options for optimal returns and a real trading edge over other traders in the exact same market. New options traders fail out at an incredible rate without proper trade research, execution timing, and option picking. Capitalize on Schaeffer’s 100+ years of options trading excellence with the most coveted product launch in company history. Don't waste another second... join us right now before the next round of trades are released!



Special Offers from Schaeffer's Trading Partners