The Chinese stock, Zhangmen Education Inc. (NYSE: ZME) experienced its rocky plummet yesterday, which saw a shift in during after-hours. Yesterday alone, ZME fell by over 20% in price, in continuance of the bearish momentum started on Friday, last week. Immediately after trade closure, ZME price shot up in a five-minute window by over 34%, later stabilizing at a 13% gain.
ZME Plummet Linked to Russia-China Relations
The plummet observed can be contextualized in the broader context of US-traded Chinese stocks crashing this week. These relate to the Chinese government’s close ties to Russia, which concerns investors significantly. E-commerce giant, Ali Baba Group (NYSE: BABA) fell to a six-year lowest, indicating the scale of the crash. This follows a difficult year for the Chinese tech sector, which saw increased regulations and restrictions by the government. ZME finds itself caught up in these broader factors impacting Chinese tech stocks. As the Chinese government continues dealing closely with sanctioned Russia, the fear of Chinese stock seeing delisting looms overhead. In order to avoid exposure to this fear, investors have been dissociating themselves from stocks such as ZME.
ZME Stock Movements
Chinese-based education company, Zhangmen Inc has gone through a number of monumental shifts, impacting its value potential. These have clearly impacted the trajectory of ZME stock price since its inception in mid- 2021. The company was founded in the context of Covid-related social restrictions and distancing, bringing a fundamental shift to the nature of education. Having digital education globally seeing entry into the mainstream evidently spelt opportunity for firms like Zhangmen. Targeting the Chinese market, the company had propelled its growth and focused on expansion and the attainment of financial sustainability. However, the general trend of ZME overall has been on a persistent decline, dropping from $104.77 to $1. This entire shift took place during a nine-month bracket, which evidently raises concerns for ZME shareholders, taking a long-term perspective.
The bounce-back in value, observed in the after-hours is of particular interest to market participants. This presumably relates to the realization that a digital education company serving the Chinese market may not face exposure to ongoing tensions in Ukraine. This is due to the nature of the industry, providing a service that has zero association to supply chain and logistical breakdowns from the crisis.
ZME stock underwent a rapid plummet on Monday, owing to concerns over China’s relations with sanctioned Russia, and a potential delisting. In the after-hours, however, the stock appears to be making a bounce-back, with the trajectory closely observed.