Sunlands Technology Group (STG) shares took a nosedive on Monday, plunging nearly 25% as investors focused on the online education company's weakening revenue outlook and shrinking student base. The sell-off overshadowed what would otherwise be good news: a profitable quarter and a fresh $50 million share repurchase program.

The company forecast second-quarter 2026 revenue between 410 million and 430 million Chinese yuan, which would represent a year-over-year decline of 20.2% to 23.9%. That's a pretty stark drop, and it's not just a one-quarter blip. New student enrollments fell to 102,127 in the first quarter of 2026 from 169,083 a year earlier, while gross billings declined to 304.8 million yuan from 412.3 million yuan.

First-quarter revenue came in at 440.7 million yuan, down 9.6% from the prior year. But Sunlands remained profitable, posting net income of 76.8 million yuan and marking its 20th consecutive profitable quarter. Investors, however, seemed more concerned about the continued top-line contraction than the margin improvements driven partly by a 19.5% reduction in sales and marketing costs.

The sell-off is a sharp reversal from just a few days ago. On May 29, the stock rallied after Sunlands announced a $50 million share buyback program and disclosed the sale of its entire stake in Guangzhou Shangzhi Side Technology Co. Ltd. for 126 million yuan in cash. That enthusiasm evaporated quickly as the market refocused on the company's growth challenges.

Monday's decline suggests investors remain skeptical about the long-term outlook for China's adult online education market, despite Sunlands' efforts to return capital to shareholders and streamline operations. The company operates in China's adult online education and personal interest learning markets through its online platforms.

At the time of publication, Sunlands shares were down 24.59% at $4.63, according to market data.