Shares of Chinese for-profit education company TAL Education Group (TAL 0.81%) jumped in Wednesday trading -- an apparent delayed reaction to yesterday's fiscal third-quarter 2022 earnings news, that now has the stock up 14.9% as of 11:20 a.m. ET.
TAL reported its earnings Tuesday morning -- but the news got drowned out by headlines about Russia's deployment of troops into Ukraine. As a result, TAL stock didn't move much yesterday, gaining only a single penny in share price. Today, with the Russia news mostly digested, investors were freer to focus on TAL's numbers.
But what do those numbers actually say? Sadly, the news is not good.
Hurt by regulation imposed on the for-profit education market by China's government last year, TAL's fiscal Q3 2022 revenue fell 9% year over year, and the company swung from a tiny fiscal Q3 2021 profit ($0.02 per American depositary share) to a $0.09-per-ADS loss.
That's not good news. On the other hand, though, TAL's losses over the first nine months of this fiscal year were much larger -- $1.33 per ADS -- so at least the rate at which the company is losing money seems to be slowing. This may be the reason the shares are getting bid up today.
Additionally, TAL noted that in response to government restrictions, it has decided to "cease offering academic subjects to students from kindergarten through grade nine ... in the mainland of China" and has, indeed, "completed the cessation." Going forward, TAL warns that this exit "will have a substantial adverse impact on the Company's revenues."
That being said, management confirms that it can still "continue to operate and develop the portion of its business other than K9 Academic AST Services, and will also explore other opportunities to provide learning solutions in accordance with relevant rules and regulations."
As the company struggles to reinvent itself, investors seem to be giving TAL the benefit of the doubt, and assuming it will succeed, today.