By skyforbes Here's my thinking:
China's economy has been hit hard, much of it self-inflicted. The real estate crisis hit consumption, valuations eventually collapsed, Western capital stepped away, and the regulatory wave in 2020-2021 crushed entire industries overnight, private education/tutoring being one of the hardest hit. TAL, a leader in the space, went from a ~$90 stock to a ~$1 stock essentially because its business model was outlawed. But today, the macro backdrop is subtly shifting. Policymakers have been signaling a growing willingness to stabilize the economy, support job creation, and encourage entrepreneurship. Real estate cleanup efforts are underway, consumer data, while not amazing, is, and sentiment from global investors is beginning to shift. None of this screams "China is fixed," but it does suggest changes are happening to move it in the right direction.
The Key Catalyst: Easing of the 2021 Education Restrictions
One recurring theme heard across multiple Chinese-focused podcasts and panels is this:
Beijing is considering easing or clarifying the 2021 crackdown on private education.
Remember: the 2021 regulations essentially wiped out China's private tutoring industry, which had been massive. TAL went from a ~$90 stock to $1. That was the market pricing in near-death.
Logic behind potential easing makes sense:
- Private tutoring was a major employer
- It was a major consumer spending category
- It acted as a foundational support for talent creation. Which is now a h
- Households spend ~17% of income on education (~5x the global average)
- Investment + hiring + innovation in the sector previously contributed meaningfully to growth
Reopening the pathway for structured, regulated private education aligns with national goals, especially as China aims to develop domestic entrepreneurs. Beijing seeks to nurture local talent, enhance educational outcomes, and boost household spending. Allowing compliant private education platforms to operate again under tighter regulations makes strategic sense, as it can stimulate the economy, revive consumption, and promote upward mobility. This approach enables the private education industry to function again under clearer rules, making it a rational strategy.
The Kicker:
If the tutoring industry reopens, even partially, TAL and New Oriental (EDU) would effectively operate as a duopoly.
Heavy compliance requirements + political scrutiny = massive barriers to new entrants.
For Beijing, this is actually preferable, and for investors, even more so.
Why TAL Specifically?
This is no longer the old hyper-growth, hyper-aggressive, burn-capital tutoring giant. TAL today is:
- Leaner
- More tech-driven
- Operating within defined regulatory lanes
- Sitting on real cash reserves
- Quietly pivoting toward ed-tech and licensed services
If regulations relax even modestly, TAL's operational muscle memory, national presence, brand trust, and digital infrastructure give it a huge advantage. Think of it as a coiled spring.
Regulatory easing doesn't need to revive 2019 TAL.
It just needs to allow profitable, compliant business lines to scale.
The stock has been trading in a pretty tight range between $8 and $11 for months. It's been essentially flat, under-owned, and overlooked. For me, this is what an asymmetric setup looks like: limited structural downside, but substantial upside if policy shifts in TAL's favor. A re-rating doesn't require TAL to return to its old model-it simply requires Beijing to give the industry clarity and permission to grow within defined boundaries.
MY POSITION:
200 Contracts of the $10 Strike, Jane 15 2027 Calls
Paid an Average of $3.5 in premiums for a total of $71,712
TL;DR
- China may be easing or clarifying the 2021 tutoring crackdown-big potential catalyst.
- Education is huge in China: households spend ~17% of income on it (~5x global avg).
- Reopening the sector helps job creation, consumption, and talent development.
- If rules loosen, TAL + EDU become a near-duopoly due to heavy compliance barriers
- Stock has been range-bound ($8-$11) but sentiment + policy tone in China is improving.
- I'm in Jan 2026 $10 calls (200 contracts, ~$72K) as a long-term bet.