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How to invest in Zhangmen Education (ZME) from Canada

Investors in Canada can't buy Zhangmen Education American Depository Shares (ADSs). But there are other ways to back the company.

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.

What we know about the Zhangmen Education IPO

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.

Can I buy Zhangmen Education stock in Canada?

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.

Are there other ways to invest in Zhangmen Education from Canada?

Although Canadian investors can’t buy Zhangmen Education stocks directly, there are still 2 ways to back the company.

1. Buy stocks in companies that have invested in Zhangmen Education

Although it’s a less direct investment than purchasing Zhangmen stocks outright, one option is to back its various investors. Lead investors include:

  • China International Capital Corporation Limited (HKSE: 3908.HK)
  • Warburg Pincus Capital Corporation (NYSE: WPCA)
  • China Renaissance Holdings Limited (HKSE: 1911.HK)

2. Buy stocks in similar companies

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.

CompanyMarket CapitalizationStock info
China Education Resources Inc.$2.60 millionTSXV: CHN
Burcon NutraScience Corporation$460.53 millionTSX: BU
Docebo Inc.$2.06 billionTSX: DCBO
Chegg, Inc.$10.33 billionNYSE: CHGG
Stride, Inc.$1.20 billionNYSE: LRN
GSX Techedu$3.68 billionNYSE: GOTU
Grand Canyon Education, Inc.$4.11 billionNasdaqGS: LOPE
Houghton Mifflin Harcourt Company$1.36 billionNasdaqGS: HMHC
Zoom Video Communications, Inc.$99.62 billionNasdaqGS: ZM

How to buy shares in a company

You’ll need a brokerage account to buy and sell shares. Here’s how it works:

  1. Compare share trading platforms. If you’re a beginner, look for a platform with low commissions, expert ratings and investment tools to track your portfolio. Narrow down top brands with our comparison table.
  2. Open and fund your brokerage account. Complete an application with your personal and financial details, like your ID and bank information. Fund your account with a bank transfer, credit card or debit card.
  3. Search for the company you want to invest in. Find the stock by name or ticker symbol (for example, BYND). Research its history to confirm it’s a solid investment against your financial goals.
  4. Purchase now or later. Buy immediately with a market order or use a limit order to delay your purchase until the stock reaches your desired price. To spread out your purchase, look into dollar-cost averaging, which smooths out buying at consistent intervals and amounts.
  5. Decide on how many to buy. Weigh your budget against a diversified portfolio that can minimize risk through the market’s ups and downs. You may be able to buy fractional shares of companies, depending on your broker.
  6. Check in on your investment. Congratulations, you own part of a company! Optimize your portfolio by tracking how your stock — and even the business — performs with an eye on the long term. You may be eligible for dividends and shareholder voting rights on directors and management that can affect your stock.

Tax implications of buying US stocks in Canada

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.

Investment accounts that do not qualify for this exemption include RESPs, TFSAs and RDSPs.

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.

Open a stock trading account

You can compare features of stock trading platforms in the table below. Once you’ve decided on the right fit for your needs, click the “Go to site” button to get started.

Name Product Available Asset Types Stock Fee Option Fee Account Fee ETF Transaction Cost Feature Table description
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Free
Get a $50 bonus when you open a Wealthsimple Trade account and deposit and trade at least $100.
Pay no commissions when you trade Canadian stocks and ETFs with Wealthsimple Trade.
Scotia iTRADE
Bonds, Options, Mutual Funds, ETFs, GICs, International Equities
$4.99-$9.99
$9.99 + $1.25 contract ($4.99 + $1.25 contract if completed 150 trades or more a quarter)
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Pay no annual account fees.
Buy, sell and trade ETFs, Equities, Options and more with competitive commissions.
CIBC Investor's Edge
Stocks, Bonds, Options, Mutual Funds, ETFs
$4.95 - $6.95
$4.95 - $6.95 (+$1.25 per contract)
$0 if conditions met, otherwise $100/year
$6.95
$4.95 - $6.95 is applicable for online stock, ETF and option trades only. Pay $4.95 when you qualify as an Active Trader (trade 150+ times per quarter).
An intuitive and easy-to-use platform with access to a variety of tools that help you make smart decisions and trade with confidence.
Interactive Brokers
Stocks, Bonds, Options, ETFs, Currencies, Futures
Min. $1.00, Max. 0.5% of trade value
$1.50 min. per order
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Extensive trading capabilities and global investment tracking.
Access market data 24 hours a day, six days a week and invest in global stocks, options, futures, currencies, bonds and funds from one single account.
Questrade
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Qtrade Direct Investing
Stocks, Bonds, Options, Mutual Funds, ETFs, GICs
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Qtrade Direct Investing offers low trading commissions and an easy-to-use platform with access to powerful tools and a wide selection of investment options. Trade 100 ETFs free of charge and thousands more for $8.75 or lower.
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Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.

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