Chip Paucek, co-founder and former CEO of 2U, appears at the company’s headquarters in Lanham, Maryland on Nov. 17, 2021. The company’s chief financial officer, Paul Lalljie, replaced Paucek as CEO in November 2023.
Marvin Joseph | The Washington Post | Getty Images
When 2U went public a decade ago, the company was out to prove it could make a splash in the notoriously difficult $550 billion U.S. higher education market.
For a while, it was on to something. The stock price ballooned from $13 at 2U’s 2014 IPO to a high of $98.58 four years later as demand increased for the company’s online education offerings. At its peak, 2U had a market cap of more than $5 billion and growth rates comparable to high-flying cloud software companies. Revenue climbed 44% in 2018.
Now, the company is hanging on for dear life.
2U’s stock price has been trading below $1 for much of 2024 following a problematic forecast in November and indications that some universities were terminating their contracts. This week, 2U issued weak guidance for the year and warned investors of “substantial doubt about its ability to continue as a going concern” without additional capital or reduced debt.
2U shares plummeted 59% after the announcement. They fell an additional 10% on Wednesday to close at 34 cents, valuing 2U at $27.5 million.
Analysts at Needham lowered their rating to hold from buy after this week’s report, and said the outlook made them more skeptical about 2U’s ability to refinance its debt, which stood at more than $900 million at the end of 2023. Cash and equivalents dwindled to $73.4 million from $182.6 million at the end of 2022.
In a statement to CNBC, a 2U spokesperson said the company won’t “speculate on potential outcomes.”
“2U expects to continue to engage constructively with our lenders and other financial stakeholders as we continue to evaluate options to strengthen our balance sheet and adapt our business to the present landscape,” the spokesperson said. “We have sufficient time…
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