Shares of Gaotu Techedu Inc. (GOTU) plunged 5.26% in pre-market trading on Tuesday, caught in a broader selloff affecting Chinese ADRs. The education technology company's stock decline comes as investors engage in profit-taking across Chinese stocks listed in the U.S., despite strong gains on Wall Street overnight.
The sharp reversal in sentiment for Chinese ADRs appears to be driven by a lack of strong catalysts and a cooling of the recent rally in Chinese tech stocks. Market observers note that while many Chinese companies have reported earnings that met or exceeded expectations in the recent reporting season, these positive results were largely priced in, leaving little room for further upside.
Adding to the pressure on Chinese stocks is the looming threat of new tariffs from the U.S. President Donald Trump has indicated plans to announce tariffs on automobile imports in the coming days, potentially escalating trade tensions. While the impact on education technology firms like Gaotu Techedu may not be direct, the overall market sentiment towards Chinese companies listed in the U.S. appears to be souring in response to these developments.
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