TWOU Stock Overview
2U, Inc. operates as an education technology company in the United States and internationally.
Price History & Performance
|Historical stock prices|
|Current Share Price||US$6.25|
|52 Week High||US$34.91|
|52 Week Low||US$5.66|
|1 Month Change||-12.22%|
|3 Month Change||-48.98%|
|1 Year Change||-81.80%|
|3 Year Change||-61.84%|
|5 Year Change||-89.39%|
|Change since IPO||-55.29%|
Recent News & Updates
Is 2U (NASDAQ:TWOU) Using Debt In A Risky Way?
David Iben put it well when he said, 'Volatility is not a risk we care about. What we care about is avoiding the...
2U: Struggling For Relevance
Shares of 2U fell more than 5% after reporting Q2 results and issuing lackluster guidance, adding to a painful >50% correction year to date. The company is massively restructuring its business to unite under the edX brand, which the company bought last November for $800 million. Meanwhile, 2U's revenue-generating degree programs are seeing declining enrollment. The company plans to slash marketing spend to save profitability, which may lead to more enrollment declines. The good part about an all-encompassing market correction: wheat gets separated from chaff. 2U (TWOU), in my view, has long been an overvalued and overhyped ed-tech stock (if we can even call it that, instead of a for-profit university!) that was long in need of a correction. This year, with investors' sentiment toward growth stocks turning more skeptical, 2U has fallen cleanly off its pedestal with its declining fundamentals moving to the spotlight. For investors who are unfamiliar with the latest in 2U: 2U began as a company that set up graduate degree programs on behalf of universities. It digitized course content for these programs, took on the responsibility of marketing these programs to potential students, and then took a cut of the tuition fee that it splits with universities (in its current structure, 2U's cut of tuition begins at a base of 35%, per CEO Chip Paucek's remarks on the Q2 earnings call). This business model came under fire over the past year. No less than the Wall Street Journal published a critique of 2U and its partner universities for marketing expensive degree programs that saddled students with crippling debt with limited prospects for higher income. In an effort to try to re-steer its brand, last November 2U spent $800 million to acquire edX, previously a non-profit open online course website began by Harvard. It's now doubling down on edX and proposing to move its entire business to a "platform" model under the edX umbrella. Year to date, shares of 2U have shed more than 50% of their value, and losses picked up steam after the company reported dismal Q2 results. The market's faith in 2U's ability to rebound is slipping heavily: TWOU data by YCharts 2U is restructuring itself in crisis mode We'll get into 2U's latest numbers and declining enrollment stats shortly, but let's review the forward-looking situation first. 2U is fighting to shore up the strength of its brand name, and its strategy for doing that is to convert into a "platform" company under the stronger edX brand. As part of this change, 2U is moving the prior CEO of edX, Anant Agrawal, into a "Chief Platform Officer" role, among other management reshuffles. The key benefit of one platform, aside from the unified branding, is consolidating operating expenses and marketing expenses under one umbrella. The company is also planning on reducing headcount by about 20% in Q3, as it eliminates redundancies between the two groups. 2U strategic update (2U Q2 earnings release) That's all fine and well, but there are a number of risks that we should be mindful of: Integration complexity. Integrating two vastly different businesses is never an easy task, and 2U's share price decline is a signal that Wall Street's faith in the company's ability to do so is questionable. Diluted branding. edX has always had a strong reputation for mostly free online course content (with smaller tuition fees for courses that offer credentials). Putting 2U's degree programs under this umbrella may sacrifice the goodwill the company spent significant money to acquire. Macro pressure. With inflation heating up and hiring seeming to tighten, and with 2U already under pressure for incredibly expensive degree programs with low proven yield, enrollment trends may continue to decline. The bottom line here: I remain quite bearish on 2U's prospects. This was always a weak model to begin with: the company shoulders all the costs of setting up and marketing its degree programs, and with bad press nailing 2U over the past few years, the return on that significant upfront investment is dwindling. Resist the temptation to buy the dip here - 2U's chances to rebound look murkier with every passing quarter. Q2 is the continuation of a disappointing story As previously mentioned, 2U's second-quarter results failed to inspire any new confidence in the stock, and it dropped a fresh ~5% after results were released. Let's now talk through some of the key highlights and red flags: 2U enrollment trends (2U Q2 investor presentation) 2U's full-course equivalent enrollments dropped by ~1.5k to 83.7k in the second quarter flat to last year. Note that this is unusual seasonality for 2U, which last year saw enrollment growth between Q1 and Q2. The company admitted to seeing tremendous pressure during the quarter. Per CEO Chip Paucek's prepared remarks on the Q2 earnings call: Simultaneously, while that was going on during the current quarter, the macroeconomic environment that we talked about on the Q1 call deteriorated further. This put additional pressure on our normal way of doing business, and also on organic demand, within all of online education, with some particular challenges in higher education. The combination of these three things, one, increasing confidence in our strategy; two, a realization of the need to fully reorganized to unlock; and three, a deteriorating macro environment drove us to make more immediate transition to the platform strategy. We believe that accelerating our transition to a platform company will strengthen our foundation and long-term sustainability by driving long-term profitability and cash flow." Similarly, revenue growth slowed to 2% y/y, hitting $241.5 million in the quarter - missing Wall Street's mark of $254.3 million (+7% y/y) by a wide five-point margin, while also decelerating seven points versus 9% y/y growth in Q1. This was, in addition, the fifth straight quarter of revenue declaration for 2U.
|TWOU||US Consumer Services||US Market|
Return vs Industry: TWOU underperformed the US Consumer Services industry which returned -29.3% over the past year.
Return vs Market: TWOU underperformed the US Market which returned -21.5% over the past year.
|TWOU Average Weekly Movement||12.0%|
|Consumer Services Industry Average Movement||8.6%|
|Market Average Movement||6.9%|
|10% most volatile stocks in US Market||15.6%|
|10% least volatile stocks in US Market||2.8%|
Stable Share Price: TWOU is more volatile than 75% of US stocks over the past 3 months, typically moving +/- 12% a week.
Volatility Over Time: TWOU's weekly volatility (12%) has been stable over the past year, but is still higher than 75% of US stocks.
About the Company
2U, Inc. operates as an education technology company in the United States and internationally. The company operates through two segments, Degree Program and Alternative Credential. The Degree Program segment provides the technology and services to nonprofit colleges and universities to enable the online delivery of degree programs.
2U Fundamentals Summary
|TWOU fundamental statistics|
Is TWOU overvalued?See Fair Value and valuation analysis
Earnings & Revenue
|TWOU income statement (TTM)|
|Cost of Revenue||US$275.44m|
Last Reported Earnings
Jun 30, 2022
Next Earnings Date
|Earnings per share (EPS)||-4.08|
|Net Profit Margin||-32.55%|
How did TWOU perform over the long term?See historical performance and comparison
Is TWOU undervalued compared to its fair value, analyst forecasts and its price relative to the market?
Valuation Score 5/6
Price-To-Sales vs Peers
Price-To-Sales vs Industry
Price-To-Sales vs Fair Ratio
Below Fair Value
Significantly Below Fair Value
Key Valuation Metric
Which metric is best to use when looking at relative valuation for TWOU?
Other financial metrics that can be useful for relative valuation.
|What is TWOU's n/a Ratio?|
Price to Sales Ratio vs Peers
How does TWOU's PS Ratio compare to its peers?
|TWOU PS Ratio vs Peers|
|Company||PS||Estimated Growth||Market Cap|
VSTA Vasta Platform
GOTU Gaotu Techedu
ARCE Arco Platform
Price-To-Sales vs Peers: TWOU is good value based on its Price-To-Sales Ratio (0.5x) compared to the peer average (2.3x).
Price to Earnings Ratio vs Industry
How does TWOU's PE Ratio compare vs other companies in the US Consumer Services Industry?
Price-To-Sales vs Industry: TWOU is good value based on its Price-To-Sales Ratio (0.5x) compared to the US Consumer Services industry average (1.4x)
Price to Sales Ratio vs Fair Ratio
What is TWOU's PS Ratio compared to its Fair PS Ratio? This is the expected PS Ratio taking into account the company's forecast earnings growth, profit margins and other risk factors.
|Current PS Ratio||0.5x|
|Fair PS Ratio||1.7x|
Price-To-Sales vs Fair Ratio: TWOU is good value based on its Price-To-Sales Ratio (0.5x) compared to the estimated Fair Price-To-Sales Ratio (1.7x).
Share Price vs Fair Value
What is the Fair Price of TWOU when looking at its future cash flows? For this estimate we use a Discounted Cash Flow model.
Below Fair Value: TWOU ($6.25) is trading below our estimate of fair value ($42.41)
Significantly Below Fair Value: TWOU is trading below fair value by more than 20%.
Analyst Price Targets
What is the analyst 12-month forecast and do we have any statistical confidence in the consensus price target?
Analyst Forecast: Target price is more than 20% higher than the current share price, but analysts are not within a statistically confident range of agreement.
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How is 2U forecast to perform in the next 1 to 3 years based on estimates from 13 analysts?
Future Growth Score0/6
Future Growth Score 0/6
Earnings vs Savings Rate
Earnings vs Market
High Growth Earnings
Revenue vs Market
High Growth Revenue
Forecasted annual earnings growth
Earnings and Revenue Growth Forecasts
Analyst Future Growth Forecasts
Earnings vs Savings Rate: TWOU is forecast to remain unprofitable over the next 3 years.
Earnings vs Market: TWOU is forecast to remain unprofitable over the next 3 years.
High Growth Earnings: TWOU is forecast to remain unprofitable over the next 3 years.
Revenue vs Market: TWOU's revenue (5.5% per year) is forecast to grow slower than the US market (7.6% per year).
High Growth Revenue: TWOU's revenue (5.5% per year) is forecast to grow slower than 20% per year.
Earnings per Share Growth Forecasts
Future Return on Equity
Future ROE: TWOU's Return on Equity is forecast to be low in 3 years time (5.8%).
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How has 2U performed over the past 5 years?
Past Performance Score0/6
Past Performance Score 0/6
Growing Profit Margin
Earnings vs Industry
Historical annual earnings growth
Earnings and Revenue History
Quality Earnings: TWOU is currently unprofitable.
Growing Profit Margin: TWOU is currently unprofitable.
Past Earnings Growth Analysis
Earnings Trend: TWOU is unprofitable, and losses have increased over the past 5 years at a rate of 37.2% per year.
Accelerating Growth: Unable to compare TWOU's earnings growth over the past year to its 5-year average as it is currently unprofitable
Earnings vs Industry: TWOU is unprofitable, making it difficult to compare its past year earnings growth to the Consumer Services industry (9.7%).
Return on Equity
High ROE: TWOU has a negative Return on Equity (-52.18%), as it is currently unprofitable.
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How is 2U's financial position?
Financial Health Score2/6
Financial Health Score 2/6
Short Term Liabilities
Long Term Liabilities
Stable Cash Runway
Forecast Cash Runway
Financial Position Analysis
Short Term Liabilities: TWOU's short term assets ($419.0M) exceed its short term liabilities ($404.0M).
Long Term Liabilities: TWOU's short term assets ($419.0M) do not cover its long term liabilities ($1.0B).
Debt to Equity History and Analysis
Debt Level: TWOU's net debt to equity ratio (117.9%) is considered high.
Reducing Debt: TWOU's debt to equity ratio has increased from 0% to 154.4% over the past 5 years.
Cash Runway Analysis
For companies that have on average been loss making in the past we assess whether they have at least 1 year of cash runway.
Stable Cash Runway: TWOU has sufficient cash runway for more than 3 years based on its current free cash flow.
Forecast Cash Runway: Insufficient data to determine if TWOU has enough cash runway if its free cash flow continues to grow or shrink based on historical rates.
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What is 2U current dividend yield, its reliability and sustainability?
Dividend Score 0/6
Cash Flow Coverage
Dividend Yield vs Market
|2U Dividend Yield vs Market|
|Market Bottom 25% (US)||1.7%|
|Market Top 25% (US)||4.7%|
|Industry Average (Consumer Services)||2.1%|
|Analyst forecast in 3 Years (2U)||0%|
Notable Dividend: Unable to evaluate TWOU's dividend yield against the bottom 25% of dividend payers, as the company has not reported any recent payouts.
High Dividend: Unable to evaluate TWOU's dividend yield against the top 25% of dividend payers, as the company has not reported any recent payouts.
Stability and Growth of Payments
Stable Dividend: Insufficient data to determine if TWOU's dividends per share have been stable in the past.
Growing Dividend: Insufficient data to determine if TWOU's dividend payments have been increasing.
Earnings Payout to Shareholders
Earnings Coverage: Insufficient data to calculate payout ratio to determine if its dividend payments are covered by earnings.
Cash Payout to Shareholders
Cash Flow Coverage: Unable to calculate sustainability of dividends as TWOU has not reported any payouts.
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How experienced are the management team and are they aligned to shareholders interests?
Average management tenure
Chip Paucek (52 yo)
Mr. Christopher J. Paucek, also known as Chip, serves as Member of Advisory Board at Lumos Capital Group LLC, and serves as a Member of Advisory Board at Exceed Capital Partners. He is a Co-Founder of 2U,...
CEO Compensation Analysis
|Chip Paucek's Compensation vs 2U Earnings|
|Date||Total Comp.||Salary||Company Earnings|
|Jun 30 2022||n/a||n/a|
|Mar 31 2022||n/a||n/a|
|Dec 31 2021||US$17m||US$726k|
|Sep 30 2021||n/a||n/a|
|Jun 30 2021||n/a||n/a|
|Mar 31 2021||n/a||n/a|
|Dec 31 2020||US$6m||US$650k|
|Sep 30 2020||n/a||n/a|
|Jun 30 2020||n/a||n/a|
|Mar 31 2020||n/a||n/a|
|Dec 31 2019||US$7m||US$557k|
|Sep 30 2019||n/a||n/a|
|Jun 30 2019||n/a||n/a|
|Mar 31 2019||n/a||n/a|
|Dec 31 2018||US$17m||US$541k|
|Sep 30 2018||n/a||n/a|
|Jun 30 2018||n/a||n/a|
|Mar 31 2018||n/a||n/a|
|Dec 31 2017||US$3m||US$514k|
|Sep 30 2017||n/a||n/a|
|Jun 30 2017||n/a||n/a|
|Mar 31 2017||n/a||n/a|
|Dec 31 2016||US$3m||US$480k|
|Sep 30 2016||n/a||n/a|
|Jun 30 2016||n/a||n/a|
|Mar 31 2016||n/a||n/a|
|Dec 31 2015||US$3m||US$421k|
Compensation vs Market: Chip's total compensation ($USD17.41M) is above average for companies of similar size in the US market ($USD2.91M).
Compensation vs Earnings: Chip's compensation has increased whilst the company is unprofitable.
Experienced Management: TWOU's management team is not considered experienced ( 1.8 years average tenure), which suggests a new team.
Experienced Board: TWOU's board of directors are considered experienced (8.5 years average tenure).
Who are the major shareholders and have insiders been buying or selling?
Insider Trading Volume
Insider Buying: Insufficient data to determine if insiders have bought more shares than they have sold in the past 3 months.
Recent Insider Transactions
|15 Feb 22||BuyUS$403,886||Mark Chernis||Individual||43,482||US$9.92|
|15 Feb 22||BuyUS$500,106||Gregory Peters||Individual||49,663||US$10.07|
|14 Feb 22||BuyUS$1,037,300||Paul Maeder||Individual||110,000||US$9.43|
|14 Feb 22||BuyUS$251,026||Christopher Paucek||Individual||26,040||US$9.64|
|Owner Type||Number of Shares||Ownership Percentage|
Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 3.8%.
|Ownership||Name||Shares||Current Value||Change %||Portfolio %|
2U, Inc.'s employee growth, exchange listings and data sources
- Name: 2U, Inc.
- Ticker: TWOU
- Exchange: NasdaqGS
- Founded: 2008
- Industry: Education Services
- Sector: Consumer Services
- Implied Market Cap: US$484.283m
- Shares outstanding: 77.49m
- Website: https://2u.com
Number of Employees
- 2U, Inc.
- 7900 Harkins Road
- United States
|Ticker||Exchange||Primary Security||Security Type||Country||Currency||Listed on|
|TWOU||NasdaqGS (Nasdaq Global Select)||Yes||Common Stock||US||USD||Mar 2014|
|2U1||DB (Deutsche Boerse AG)||Yes||Common Stock||DE||EUR||Mar 2014|
|0LHP||LSE (London Stock Exchange)||Yes||Common Stock||GB||USD||Mar 2014|
Company Analysis and Financial Data Status
|Data||Last Updated (UTC time)|
|Company Analysis||2022/09/30 00:00|
|End of Day Share Price||2022/09/30 00:00|
Unless specified all financial data is based on a yearly period but updated quarterly. This is known as Trailing Twelve Month (TTM) or Last Twelve Month (LTM) Data. Learn more here.