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Thursday, September 28, 2023

Sunlands Technology Group (STG) Stock Trends Lower Despite Having Circumvented Threat of Delisting Due to Non-Compliance

Sunlands Technology Group (STG) stock prices were down by 1.02% as of the market closing on September 24th, 2021. This brought the price per share down to USD$5.83 at the end of the trading day. Subsequent aftermarket fluctuations have seen the stock fall by 5.66%, bringing it down to USD$5.50.

STG Stock’s Non-Compliance

August 20th, 2021 saw STG stock announce having received a letter from the NYSE in regard to its noncompliance with ADS Trading Price regulations. The letter was dated July 23rd, 2021 and resulted from the company’s trading price for its ADSs falling below required levels. The company has six months from July 23rd, 2021 to rectify the issue and bring the average price of its shares above USD$1.00. The six month period must end with the company’s shares closing at a price of at least USD$1.00, along with a trailing 30 day average share price of at least USD$1.00.

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Net Revenue & Gross Profit Reports

Net revenues for the second quarter of fiscal 2021 came in at USD$97.5 million. This is a 22.8% year over year increase from the USD$79.36 million reported in the prior year quarter. The yearly increase was largely attributable to the year over year growth in gross billings since the second half of fiscal 2020 through to the first quarter of 2021. Gross Profits were reported at USD$82.4 million, representing a 28.9% increase from the USD$63.93 million reported in the prior year quarter.

STG Stock’s Costs of Revenue

STG stock reported costs of revenues for the second quarter of fiscal 2021 in the amount of USD$15.1 million. This is a 2.3% decrease from the USD$15.42 million reported in the prior year quarter. The year over year decrease was largely driven by reduced insurance related costs that were incurred for the company’s integrated education service package purchased by students.

Stellar Liquidity Position

The end of the second quarter of fiscal 2021 saw STG stock report a stellar liquidity position. The company reported USD$129.4 million in cash and cash equivalents as of June 30th 2021. This was further consolidated by USD$7.7 million in short term investments.

Future Outlook for STG Stock

The company is keen to ensure the recovery of its average share price in order to avoid the threat of being delisted. STG stock has been allocating resources towards ensuring effective growth that will drive increases in its shareholder equity. Current and potential investors are hopeful that management will be able to effectively allocate these resources to that end. This is hoped to facilitate significant and sustained increases in shareholder value over the long term.

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