On January 29 of this year, TAL Education Group (TAL.US) disclosed its Q3 FY2026 financial results for the period ending November 30 of the previous year. The report revealed that TAL achieved net revenue of $770 million for the quarter, a 27% year-over-year increase; cumulatively for the first nine months of FY2026, the company's net revenue reached $2.207 billion, up 34.57% compared to the same period last year. Concurrently, the company demonstrated a significant improvement in profitability: operating profit for the quarter was $93.123 million, turning a profit compared to a loss in the prior-year period. Under these conditions, the company reported net income attributable to shareholders of $131 million, with Non-GAAP net profit reaching $141 million, a staggering 266.6% increase year-over-year, far exceeding market expectations. Stimulated by these positive earnings, TAL's stock price opened sharply higher on January 29 with a 10.22% gain and continued to climb, ultimately closing up 18.03% at $12.70. This marked the third time in three months that TAL's stock price breached the $12 threshold, following a surge to an intraday high of $13.37 on October 30 of the previous year. However, just as the market anticipated that the strong earnings might propel the stock price beyond previous highs, TAL staged a "high-dive" on January 30 and February 2, recording two consecutive days of declines. A "group selling spree" by company executives appears to have once again become a significant factor hindering the upward momentum of the stock price.

The substantial gap-up opening and nearly 20% closing surge in TAL's stock price following the earnings release were undoubtedly linked to its better-than-expected financial performance. Among the key metrics that likely prompted heavy buying that day was the Non-GAAP net profit, which more accurately reflects the operational performance of the core business. The financial report showed that Non-GAAP net profit for Q3 FY2026 reached $140 million, a massive 266.6% increase year-over-year; on this basis, the net profit for the first three quarters of FY2026 also amounted to $320 million, a 124.0% increase compared to the same period last year. Growth on the revenue side and a decline on the expense side were the critical factors behind TAL's improved profitability. On the revenue side, the company achieved net revenue of $770 million for the quarter, a 27% year-over-year increase. As one of the company's core revenue sources, TAL's learning services business (including offline small-class courses and online business) saw its revenue increase year-over-year in FY26Q3, with both offline small-class course revenue and online literacy course revenue posting growth. Although TAL did not disclose specific revenue figures for this segment in the report, it disclosed deferred revenue of $1.16 billion for the quarter, a substantial 73.2% increase year-over-year. Meanwhile, company executives disclosed during the earnings call that "the renewal rate for literacy small classes is around 80%, with average customer spending remaining stable." Regarding the core content solutions business central to the company's transformation, executives revealed that in Q3 FY2026, the weekly average active rate for TAL learning device users remained around 80%, with average daily usage time of approximately one hour. In terms of overall revenue, the contribution from this business has increased from 16.3% in FY2023 to over 30% currently. However, the company also noted in its report and earnings call that while both revenue and sales volume for its learning devices business achieved year-over-year growth, the quarterly revenue growth rate slowed sequentially, primarily due to product release cycle differences creating a high base effect for sales in Q3 FY2026, and the business is gradually transitioning from a rapid expansion phase to a steady growth phase. Furthermore, it is noteworthy that TAL's Non-GAAP net profit for the quarter was significantly higher than its operating profit. This was primarily attributable to the "Other Income" line item in the income statement, which reached $38.591 million in Q3 FY2026, a 112.7% year-over-year increase; for the first nine months of FY2026, this item totaled $115 million, a 122% increase. On the expense side, in Q3 FY2026, the company's sales and marketing expense ratio was only 28.6%, a significant decrease of 8.8 percentage points year-over-year, benefiting from both reduced online marketing and brand promotion expenses for the learning devices business and the fact that the quarter is not the peak customer acquisition season for online literacy courses, leading to a sequential decrease in related online marketing spend. Additionally, benefiting from economies of scale due to expanded revenue and a 30.2% year-over-year decrease in total share-based compensation expense to $108 million, the company's general and administrative expense ratio was 15.4%, a reduction of 2.9 percentage points year-over-year. Consequently, TAL's gross margin reached 56.1% in Q3 FY2026, an increase of 3.3 percentage points year-over-year, while the Non-GAAP net margin attributable to shareholders was 18.4%, a significant increase of 12 percentage points.

Is another "Executive Group Selling Spree" unfolding? Observations indicate that since late April of last year, TAL's stock price has been trapped in a sideways consolidation pattern. Examining the price action prior to this earnings release, after a sustained upward move in late October last year touched the upper Bollinger Band, TAL's stock price began a prolonged震荡下跌. Following two consecutive large bearish candlesticks on October 31 and November 3 that rapidly pulled the price down to the middle Bollinger Band, the stock price continued to fluctuate between the middle and lower Bollinger Bands amid subdued market sentiment. Even though there were attempts to challenge the upper Bollinger Band on December 15 last year and January 12 this year, neither was supported by significant volume expansion nor resulted in a solid candlestick breakout, technically constituting classic Bollinger Band "false breakouts," after which the stock price resumed its oscillation between the middle and lower bands. In terms of volume, daily trading volume during this phase was significantly lower compared to late October last year, indicating a lack of external buying interest. However, in late January this year, after a "six-day losing streak," TAL's stock price finally experienced an oversold rebound on January 29, supported by the strong fundamental earnings report. Unlike previous attempts, this surge was accompanied by显著放大的成交量, with trading volume reaching 15.0932 million shares that day, and the solid candlestick break above the upper Bollinger Band. The expanded volume suggested that potential buyers on the sidelines were significantly more willing to enter the market at what they perceived as a low price level for TAL. But on January 30 and February 2, TAL staged a "high-dive," recording two consecutive days of declines with noticeably shrinking volume, potentially indicating that certain factors were affecting external capital's valuation assessment of the company at that time. A renewed "group selling spree" by multiple executives might be one of these factors. It was observed that on February 2, TAL filed three documents disclosing share sales by senior executives. The filings revealed that on February 2, TAL's President and CFO, Peng Zhuangzhuang, sold 25,000 shares, realizing approximately $317,500 (about 2.2 million RMB). Simultaneously, Director and COO Liu Yachao sold 14,602 shares, realizing about $185,400. CTO Tian Mi also sold 132,300 shares on the same day, realizing approximately $1.68 million. In fact, this is not the first instance of share sales by TAL executives. As early as January and April of last year, a series of sales occurred involving internal executives including the President, independent directors, and the COO. For example, on April 28 last year, President and CFO Peng Zhuangzhuang sold 15,938 shares of TAL, realizing $146,000 (about 1.05 million RMB). On the same day, independent director FENG YAN sold 11,409 shares, realizing $104,500; CTO Tian Mi sold 53,655 shares on August 25 last year, realizing $583,200. It is worth noting that referencing TAL's stock price movement in the trading days following previous executive sales, the stock typically experienced萎缩的交易量. For instance, on August 28 last year, TAL's trading volume plummeted to only 2.0149 million shares, setting a then-new low for daily volume in late August. Following the disclosure of executive sales on February 2 this year, TAL's stock trading volume for the day had fallen to 4.6338 million shares, a drop of nearly 70% compared to the volume on January 29.