Education Technology Penny Stocks Surge After Elite Education IPO This Week
Education technology penny stocks took off on Friday morning. The main catalyst appears to have been the mega education technology IPO of China-based Elite Education Group International (NASDAQ: EEIQ). On Thursday, the tech stock opened for trading at $4 a share and has promptly rallied to over $70 during premarket on Friday. The interesting part was the IPO was priced at $8, leaving early investors holding the bag on March 25th. The huge rally that has followed on the 26th triggered a sympathy rally across numerous China-based education technology companies.
What Is Elite Education (NASDAQ: EEIQ)?
Elite Education Group International operates through its subsidiary Quest Holding International LLC. The company provides “comprehensive, one-stop education solutions for Chinese students who are interested in study abroad programs in the US and other countries.” Miami University of Ohio is the company’s primary study abroad partnership.
Through the IPO, the company raised $6 million in net proceeds from just 750,000 shares offered. Obviously, a small-float like this is something to take notice of. In general, the lower the float, the higher the potential is for big swings. We saw this happen in the stock market today, with EEIQ stock exploding over 1,600% since its IPO debut.
Which Education Technology Penny Stocks Are Hot Right Now?
This big move in EEIQ stock has sent a shockwave across the EdTech space, with many penny stocks rallying in sympathy. It’s also worth mentioning that plenty are also low float penny stocks, which adds more fuel to the fire.
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Wah Fu Education Group Limited (NASDAQ: WAFU) was a clear example of this sympathy sentiment. On March 25th, WAFU stock closed below $5 per share. With the news of EEIQ’s IPO, the penny stock reached highs of over $36 during premarket hours. As the official opening bell rang, the former penny stock surged to highs of $21 on record volume.
We’ve discussed WAFU in the past, and it has usually been when sympathy played a role. Last summer, the penny stock surged after traders started buying up low-float penny stocks connected to origins in China. Not only did WAFU jump, but several other China-based tech stocks followed the trend. It would appear that EEIQ has become the latest sympathy catalyst to note this week.
Penny Stocks To Buy [or avoid]
Whenever there is an industry catalyst creating sympathy sentiment, it begs the question, “should I buy into the trend or avoid it entirely?” A lot of that has to do with your trading style, in general. Can you take time to sit in front of your trading desk to watch penny stocks fluctuate? I say this because if you look at the history of stocks like these, many fail to followthrough for much longer than a day or two. Will that be different this time around? Let’s see what happens next and with that, take a look at a few other trending penny stocks today.
- Four Seasons Education (NYSE: FEDU)
- ATA Creativity Global (NASDAQ: AACG)
- China Liberal Education Holdings Limited (NASDAQ: CLEU)
Four Seasons Education (NYSE: FEDU)
One of the lower float penny stocks on this list is Four Season Education. With just over 45 million shares outstanding and some sources showing a float under $15 million, FEDU has attracted some attention in sympathy with the move that Chinese EdTech stocks are making.
Friday’s morning session saw shares of the penny stock move from $1.77 to highs of $2.64. The move was swift, and FEDU pulled back to around $1.80 just before the lunch hour. The interesting part is that it had traded nearly double its shares outstanding by that time as well.
Four Seasons specializes in math education for K-12 school students. The company just recently launched registration for spring 2021. The company has focused on optimizing its operations by offering a unique curriculum. Furthermore, in its last quarter, the company had reported better than expected revenue from its over 53,000 enrolled students.
“We were excited to see a 54.5% year-over-year growth in middle school class enrollment this quarter to a new record high.”
Yi (Joanne) Zuo, Director, and Chief Executive Officer at Four Seasons Education
Due to the volatility that has been created in this niche, it’s important to keep an eye on volume and trend. Since FEDU has pulled back so quickly from its intraday high, there’s always a risk that the sentiment deteriorates. Will FEDU rally one more time before April? Comment below.
ATA Creativity Global (NASDAQ: AACG)
Another one of the education technology companies trending on Friday is ATA Creativity Global. In a similar fashion to FEDU, WAFU, EEIQ, and others, AACG jumped early in the morning. What you’ll also notice on the chart is that it’s no stranger to big moves. Earlier this year, AACG stock exploded to highs of over $19 and promptly came back down just one day later. This is what I was talking about above in regards to followthrough on certain penny stocks.
ATA was on the list of penny stocks trending along with the rest of the EdTech space in any event. While there weren’t any headlines to pair with this move other than the EEIQ IPO, ATA could have something to look forward to in the near-term. Next week the company reports Q4 and 2020 financial results. Since they’re on Monday, the risk/reward to weigh right now is whether or not you think earnings come in stronger or weaker than expected.
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If we go by the Q3 figures, growth was slowed during the quarter. This was mainly due to COVID-related concerns. However, since much of China had begun reopening and there’s been a renewed interest in digital learning over the last few months, will Q4 ultimately prove stronger? Leave us a comment on what you expect for AACG earnings.
China Liberal Education Holdings Limited (NASDAQ: CLEU)
Finally, China Liberal Education followed suit today with the rest of the Chinese education technology stocks. This year, it was at the center of attention after 4 institutional investors showed stakes in the company totaling more than 57%. Obviously, institutional interest is not usually seen as a bad thing, and, in turn, the market took the news as a positive. CLEU stock jumped to highs of nearly $10 but, similar to AACG’s move, and it came right back down in the days that followed.
This week, sympathy momentum spiked up the stock again. CLEU rallied to highs of $13 during the premarket session and ended up opening officially at $4.50. With less than 10 million shares outstanding, this is one of the lowest-float names on this list. In light of this, make sure you’re aware that high volatility can play a role.
Where does China Liberal fit in the education industry? The company provides textbooks, overseas study consultations, and smart campus solutions. This type of exposure to education in China seems to have been enough to spark early penny stock momentum. It will be interesting to see if there will be any followthrough after this initial move.
Are These Penny Stocks Worth It?
I’ll leave you with this: penny stocks, especially those without any fundamental catalyst, can be risky. Without any other reason for a move besides hype, what is there to “chew on” per se? Many of these companies are illiquid, normally, and the charts show that trend. Have they rallied sporadically over the last few months? Many have, but are they the best penny stocks to buy right now, or should you avoid them entirely? This comes down to your trading strategy.
