Tal Education Shares Plunge On Sales Fraud, Employee Wrongdoing

Shares in China’s after-school tutoring company Tal Education (TAL) have taken a battering after the company announced that an employee had ‘conspired with external vendors’ to inflate “Light Class” sales by forging contracts and other documents.

For the fiscal year 2020 ended February 29, 2020, “Light Class” sales accounted for approximately 3% to 4% of the company’s total estimated revenues.  

According to the statement “TAL discovered irregularities and violations of the Company’s business conduct and internal control policies by an employee in the Company’s newly introduced “Light Class” business.”

The employee in question has now been taken into custody by the local police. On the news shares plunged over 20% in after-market trading.  

Just last week, the ‘Starbucks of China’, Luckin Coffee, revealed that a preliminary investigation had turned up suspected fraud of over $300 million. 

Nonetheless analysts demonstrate a bullish outlook on Tal Education. For instance, Bank of America’s Lucy Yu recently upgraded TAL to ‘buy’ arguing that the stock’s long-term structural growth could be “even more robust” when COVID-19 has passed. (See TAL’s stock analysis on TipRanks)

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Harriet Lefton
Harriet Lefton, originally from the UK, began her career as a journalist specialising in the niche world of metal markets. She graduated from the University of Cambridge before becoming a qualified UK lawyer. Now she has turned her attention to the world of financial blogging, covering US stocks, analysts and all manner of things finance-related.

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