Major investors of New Oriental Education's Hong Kong listed stock Koolearn Technology Holding, including Tencent, reduced their holdings following the stock price plummeting shortly after a sharp jump by the company’s bilingual livestreaming of product sales on Douyin.

Tencent offloaded 74.6 million shares in Koolearn between June 15 and June 16, reducing its shareholding from 9.04 percent to 1.58 percent, cashing out more than HK$700 million ($89.17 million), according to the Hong Kong Stock Exchange. Tencent was the second largest shareholder of Koolearn with 90.42 million shares before the selloff.

The stock price of Koolearn closed at HK$17.5 per share on Tuesday, up 3.06 percent. Shares in Hong Kong listed New Oriental Education increased 4.04 percent to HK$16.5 per share.

The stock prices for both Hong Kong listed Koolearn and New Oriental have fallen sharply over recent days.

The share price of New Oriental has slumped for three consecutive trading days, recording a three-day cumulative decline of 11.3 percent closed on Monday, while Koolearn's stock price has slid for two consecutive trading days, with a two-day cumulative decline of 40.63 percent, domestic economic news site cs.com.cn reported.

Investors did not expect the stock plunge after the sharp jump, which is understandable, Zhang Yi, CEO of iiMedia Research Institute, told the Global Times on Tuesday. 

Other than Tencent, several foreign investors including Citibank, JPMorgan Chase, Morgan Stanley and HSBC, have also recently reduced their holdings in Koolearn.

Morgan Stanley reduced its holdings of 35.31 million shares and 36.69 million shares on June 15 and June 16, respectively. HSBC, on the other hand, reduced its holdings by 3.67 million shares and 7.02 million shares on June 14 and June 15, respectively. JPMorgan Chase cut its holdings by15.45 million shares on June 17, Wind data revealed.

According to a report by CITIC Securities on June 19, Oriental Selection, a subsidiary of Koolearn, has recently seen an explosion of traffic following its bilingual livestreaming going viral, laying out the path for potential sustainable long-term development.

Zhang remained optimistic about the success of Oriental Selection’s livestreaming, with plenty of opportunities approaching such as the summer break and the annual “Double eleven” shopping festival in the second half of 2022. 

He said that if the current booming business for Oriental Selection lasts, New Oriental may even be able to make up for some of its previous losses in the education sector, adding that the cost of running the livestreaming business would be lower than operating educational institutions. 

However, the report also noted that the stock price of Koolearn still faces uncertainties, particularly linked to risks such as the volume of traffic the service generated going down.

New Oriental’s founder Yu Minhong said on Tuesday in a livestreaming session that the company may open an e-commerce school as its livestreaming style incorporates knowledge and culture, reflecting the company’s teaching style over the past 30 years, Chinanews.com reported. 

Yu noted that anchors and livestreamers in China now need cultural training, which could be done by New Oriental, adding that the e-commerce school is set to further elevate the level of the group. 
 
The livestreaming room for Oriental Selection on Douyin accumulated 17.55 million followers with 16.30 million likes as of press time.

Global Times