On November 29, Chinese online education company VIPKid denied the rumors on WeChat saying the company is going bankrupt. The company also posted a 100,000 yuan ($14k) reward to find the person who spread the rumors.
“The company has received an additional one billion yuan ($14 million) investment from Tencent, and our revenues from the back-to-school season exceeded 2.7 billion yuan ($38 million),” said VIPKid.
Negative rumors have haunted VIPKid after a Weibo post speculated that VIPKid had committed financial fraud, a matter that was clarified six days later by the company. Rumors also claimed that VIPKid’s product technology senior vice president Xiang Bibo and strategy senior vice president Ye Lan were considering quitting their jobs.
As the foremost online English education giant in China, VIPKid’s user base has grown rapidly since its founding in 2013. The number of students registered on the platform has surpassed 700,000 and the company employs over 90,000 foreign English teachers as of August 2019. After the Series E fundraising, the company is valued at $4.5 billion.
SEE ALSO: Tencent Leads VIPKID Series E Financing
However, the company has always had a profit problem. According to The Information, the company’s net loss reached 2.2 billion yuan ($31 million), although its revenue increased to 3 billion yuan ($43 million) by the first ten months of 2018. There are further concerns over high cost of hiring foreign English teachers, shrinking the company’s margins and leaving many analysts to question the sustainability of the company’s unit economics.
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