Why Golden Sun Education Is Plunging Hard Today

What happened

Shares of Golden Sun Education Group (NASDAQ:GSUN) are plunging in morning trading Monday on no company-specific news, but the move follows a massive run-up on Friday, which also occurred for no good reason.

At 11:48 a.m. ET, the Chinese education stock was down 31.6% to $36.16 per share. Considering it surged some 200% at one point on Friday before settling down to a 92% gain on the day, Golden Sun is still up 31% from Thursday's close.

Image source: Getty Images.

So what

Golden Sun provides tutorial services in China. The stock had its IPO in late June when it was priced at $4 per share, but immediately rocketed at the open to begin trading at $19 per share.

It has suffered extreme volatility since then with the Nasdaq stock exchange's circuit breakers kicking in to halt trading at times. That happened on Friday as the stock was soaring, and it occurred again this morning on its way back down.

The spike in the stock, along with its subsequent collapse, doesn't appear to be related to any short squeeze on its shares. It recently reported 37,500 shares were sold short, but with 18.4 million shares outstanding, it's a negligible amount that shouldn't drive the stock one way or the other.

Now what

Despite having a near $1 billion market cap, Golden Sun Education has just a little over $7 million in quarterly revenue while its profits plummeted from $1.6 million last year to just $400,000 this year. The education stock is not worth the attention being paid to it, and investors should stay away from such speculative plays.

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Rich Duprey has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.