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The plunge in US markets is spreading beyond our shores -- and has even hit the Chinese stocks.
And one of the notable decliners is New Oriental Educational & Technology Group, Inc. (NYSE: EDU), which reported a disappointing fiscal Q2. The company is a leading English language provider.
Revenues came to $32.6 million, up 42.4%. Net income was up 77% to $2 million.
Good, huh? Unfortunately, it looks like fiscal Q3 may be tough. New Oriental sees revenue growth of 22% to 28%.
What are the issues? Well, there are likely to be disruptions from the upcoming Olympics (who wants to study then?)
New Oriental is also ramping up marketing. No doubt, there is competition. What's more, the costs of advertising are increasing (perhaps because of the robust advertising market in China that has seen a variety of high-profile IPOs).
Something else: inflation seems to be out-of-control in China. Ultimately, this can pressure margins for New Oriental.
Despite all this, the company is still investing for the long-term. But, as for Wall Street, things are not so sanguine, as New Oriental's stock price has plunged 28.96% to $57.48.
Tom Taulli is the author of various books, including The Complete M&A Handbook
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