Why Did Datasea Inc. (DTSS) Soar 14.13% on Strong Revenue Growth?

Datasea Inc. (NASDAQ:DTSS) shares surged 14.13% in pre-market trading on May 19, 2025, marking a significant gain for the company's shareholders. This recent surge comes after a tumultuous period for the stock, which has seen a 61% drop over the past year. Despite this, the company's price-to-sales (P/S) ratio of 0.4x suggests that it may still be undervalued compared to its peers in the Software industry, where P/S ratios often exceed 4.8x.

Datasea has demonstrated strong revenue growth, with an impressive 113% increase last year and a 245% rise over the past three years. This growth trajectory is notably higher than the industry's one-year growth forecast of 15%. However, the market's skepticism about the company's ability to maintain this growth rate has kept its P/S ratio suppressed. Investors are cautious, anticipating potential revenue instability despite the company's recent performance.

The recent share price jump has not yet brought Datasea's P/S ratio in line with the industry median, indicating that the market remains unconvinced about the company's future prospects. This discrepancy suggests that there may be underlying risks or concerns that are not fully reflected in the current share price. Despite the strong revenue growth, the market's sentiment appears to be influenced by broader concerns about the company's ability to sustain its performance.