Wealth evaporates Chinese education billionaire Larry Chen in trouble
Chinese Larry Chin made huge profits in a short time, catching him up with the billionaires, but he is now at risk of getting out.
Larry Chin is a middle-school teacher in China, who switched to work in digital-education-platform companies in 1999 by joining the New Oriental Education and Technology Group to become the company’s CEO, and then left for GSX in 2014, undergoing a dramatic transformation.
Chin’s GSX shares have risen more than 44% since the beginning of 2019, amid growing corporate revenues, according to Bloomberg.
Meanwhile, Chen’s wealth has tripled in just two weeks to $15.6 billion in January.
But now the Chinese teacher is under threat of a run on billionaires, with GSX Tech Edu having lost 88% of its value since January 2021 with a total loss of $14 billion.
Chen’s wealth fell to just $1.9 billion, according to the Bloomberg Billionaires.
China’s Restrictions on Education Platforms
GSX Tech Edu has faced a host of problems including a government crackdown on online education platforms.
China’s education industry is facing a wave of scrutiny after President Xi Jinping’s remarks last March criticizing the pressure that post-school tutoring is placing on children.
China’s Ministry of Education is planning to set up a department to oversee all private education platforms.
Sandy Chin, a spokeswoman for GSX, said this week that the company has suspended its work on preschool education for children, who are between the ages of 3- 8, in compliance with rules that ban kindergarten schools and private schools from teaching primary school curricula.
The company received a maximum fine of 500 thousand yuan ($78356) last April from four private education providers for offering false or misleading prices to attract customers.
Difficulties
This was not the only blow to GSX Tech Edu. One of Hoang’s most prominent investors is facing difficulties, including the collapse of Arquigos last March after it failed to cover orders by margin.
The Hwang family’s investment office has built leverage investment centers in GSX, and other companies using margin buying. As some stocks fall, banks have asked for collateral to cover the centers.
But Hwang couldn’t cover them, which led to large selling of the company’s and other companies’ shares, with GSX falling 56% in one day.
