Sunlands Technology Group (STG) is having a rough week. After shares cratered 24.59% on Monday to $4.63, the stock is down another 18.19% in premarket trading Tuesday, sitting at $3.55. The sell-off follows the company's first-quarter earnings report, which revealed some serious headwinds.

Let's start with the enrollment numbers, because they're the heart of the problem. Sunlands brought in 102,127 new students in Q1, down from 169,083 a year ago—a drop of nearly 40%. Gross billings followed suit, falling to 304.8 million yuan from 412.3 million yuan. That's a 26% decline, and it's got investors worried about the company's ability to grow in China's competitive adult online education market.

Then there's the guidance. Sunlands expects second-quarter revenue between 410 million and 430 million Chinese yuan, which would be a year-over-year decline of 20.2% to 23.9%. That's a tough pill to swallow, especially since the company just posted net income of 76.8 million yuan for Q1—its 20th consecutive profitable quarter. But profitability doesn't matter much if the top line is shrinking.

What makes the sell-off even more dramatic is how quickly sentiment flipped. Just last Friday, shares surged after Sunlands announced a $50 million share repurchase program and the sale of its entire stake in Guangzhou Shangzhi Side Technology Co. Ltd for 126 million yuan in cash. That looked like a reason to celebrate. But the earnings report on Monday wiped out all those gains and then some.

Sunlands has been cutting costs to protect its bottom line. Sales and marketing expenses dropped 19.5% in Q1, which helped keep net income positive. But revenue still fell 9.6% to 440.7 million yuan, so the cost-cutting only goes so far.

From a technical perspective, the stock is in a precarious spot. Even after the premarket slide, STG is still trading 8.6% above its 20-day simple moving average (SMA) of $3.27 and 2.7% above its 50-day SMA of $3.46. So the near-term bounce hasn't fully broken yet. But the longer-term picture is uglier: the stock is 15.2% below its 100-day SMA ($4.18) and 38.4% below its 200-day SMA ($5.76). That keeps any rallies in "repair mode" rather than signaling a clean uptrend.

The moving averages themselves tell a bearish story. The 20-day SMA is below the 50-day SMA, and the 50-day is below the 200-day SMA—confirming the death cross that formed back in November 2025. Key resistance sits at $3.50, while support is at $3.

For now, Sunlands is caught between a weak growth outlook and a market that's not willing to wait for a turnaround. The buyback and asset sale gave traders a reason to buy on Friday, but the fundamentals are what matter in the end.