Meten Holding Group Ltd. (NASDAQ:METX) Stock Sees Another Bearish Day: Down 20% in a Week

Meten Holding Group Ltd. (NASDAQ:METX) fell 11% and 20% in a week after the company announced unaudited financial results for Q3 and nine months ending September 30, 2021.

Market Stats

On Monday, METX stock slumped 11.50% at $0.3829 with more than 69.83 million shares, compared to its average volume of 96.06 million shares. The stock has moved within a range of $0.3611 – 0.4070 after opening trading at $0.3736.

Q3 Earnings Recap

In the third quarter, the company reported revenue of $29.2 million, representing a decline of 36.9% YoY. 9M 2021 revenue was down 10.4% YoY mainly due to COVID-19 resurgence and decline in offline learning centers. In addition, gross profit in the third quarter dropped 49.1% to $9.9 million due to a decline in gross billions.

At the end of the quarter, the company had 64 operational learning centers. Meten Holding closed around 38 additional offline learning centers by the end of Q3 2021to maximize the offline center’s layout. As a result, adjusted net loss during the quarter widened by 364.8% YoY to $26.5 million, while 9M 2021 adjusted net loss was up 31.9% YoY to $46.5 million. CEO Alan Peng said the company reduced learning centers in each city as the company prepares for business transformation. So, in the coming weeks, METX is worth watching.

Key Quote

“In the third quarter of 2021, we have significantly reduced the number of our offline learning centers to effectively reduce the impact of the resurgence of the Covid-19 pandemic on our offline business operations, improve resource utilization, and prepare for the Company’s business transformation. As a result, the number of learning centers is reduced to one to two in each city. With the initiation of its business adjustment, the Company’s performance has been impacted in the third quarter of 2021. From a long term perspective, these measures are expected to greatly reduce the Company’s fixed cost, increase profit margins, and reduce operational risks. Following an effective resource reallocation, the Company expects that the operating conditions and profitability of its offline learning centers will be significantly improved once the Covid-19 pandemic situation is under control.

Traders Corner

METX stock is trading below the 20-Day and 50-Day Moving averages of $0.48 and $0.41 respectively. Moreover, the stock is trading below the 200-Day moving average of $1.16. The stock is up 25% in the past month.