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China-based online tutoring platform, Zhangmen Education, is selling American Depository Shares (ADSs) on the NYSE. Learn more about the Zhangmen Education IPO, and find out if investors in Canada can buy in.
Note: all dollar amounts on this page are in US dollars unless otherwise stated.
On Tuesday June 8, 2021, Zhangmen Education, an online educational platform based in Shanghai, went public on the NYSE. The company sold 3,625,000 American Depositary Shares (ADSs) under the ticker symbol “ZME.”
The opening stock price was $16.13, which was 40% higher than the stock price announced just prior to the IPO ($11.50). The total amount raised from the IPO was around $41.7 million. The company is currently valued at approximately $1.8 billion.
Zhangmen Education Inc. originally filed a prospectus with the the US Securities and Exchange Commission on Thursday, June 3, 2021. According to the document, Morgan Stanley & Co. LLC and Credit Suisse Securities (USA) LLC are acting as lead underwriters of the IPO.
We’ll update this page as more information becomes available.
Unfortunately, no. Zhangmen Education is only selling American Depositary Shares, which are equity shares of a non-US company held by a US depository bank. Generally, only US residents can have accounts with US depository banks. So, Canadians can’t buy Zhangmen Education stocks directly.
Depository Banks are financial institutions that hold people’s assets (money, securities etc.) for safekeeping. Where stock trading is concerned, depository banks make it relatively safe and easy for US residents to buy stocks in foreign companies that trade on US exchanges like the NYSE or the Nasdaq. This is because a depository bank act as a custodian of stocks until they’re sold, after which it transfers the stocks between investors’ accounts.
Although Canadian investors can’t buy Zhangmen Education stocks directly, there are still 2 ways to back the company.
Although it’s a less direct investment than purchasing Zhangmen stocks outright, one option is to back its various investors. Lead investors include:
Zhangmen Education is a China-based online tutoring platform that provides one-on-one support for students aged 4-18. Over 60 million students have used the platform to date. Zhangmen’s 2020 revenue was $613.3 million up 51% from its 2019 revenue of $407.4 million. However, it posted net losses of $196.6 million and $242 million each year, respectively.
The following companies provide educational support services or develop education technology. You can buy stocks in these companies using a trading platform that provides access to Canadian and international stock exchanges.
|Company||Market Capitalization||Stock info|
|China Education Resources Inc.||$2.60 million||TSXV: CHN|
|Burcon NutraScience Corporation||$460.53 million||TSX: BU|
|Docebo Inc.||$2.06 billion||TSX: DCBO|
|Chegg, Inc.||$10.33 billion||NYSE: CHGG|
|Stride, Inc.||$1.20 billion||NYSE: LRN|
|GSX Techedu||$3.68 billion||NYSE: GOTU|
|Grand Canyon Education, Inc.||$4.11 billion||NasdaqGS: LOPE|
|Houghton Mifflin Harcourt Company||$1.36 billion||NasdaqGS: HMHC|
|Zoom Video Communications, Inc.||$99.62 billion||NasdaqGS: ZM|
You’ll need a brokerage account to buy and sell shares. Here’s how it works:
Agreements between Canada and the US require Canadians holding US stock investments to pay the US Internal Revenue Service (IRS) a 15% withholding tax on any dividends earned on their US stocks. Interest earned from bonds or other interest-yielding US investments are similarly taxed at a rate of 10%.
An exception is made for stock investments held in trust exclusively designed to provide retirement income. Such trusts include RRIFs, LIRAs, LIFs, LRIFs and Prescribed RRIFs. RRSPs are also exempt from US withholding tax if you own US investments in the form of US stocks, bonds or ETFs.
All income from investments, including foreign investments, must be declared as part of your income on your Canadian tax return. Unless your US earnings are exempt from withholding tax, this means you’ll be double taxed on those earnings — first by the IRS, then by the CRA. However, the CRA may allow you to claim foreign tax credits for any taxes you’ve already paid to the IRS.
Speak with a tax professional to find out what rules and exceptions apply to your circumstances.
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