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TWOU

2U NasdaqGS:TWOU Stock Report

Last Price

US$6.25

Market Cap

US$484.3m

7D

8.1%

1Y

-81.8%

Updated

30 Sep, 2022

Data

Company Financials +
TWOU fundamental analysis
Snowflake Score
Valuation5/6
Future Growth0/6
Past Performance0/6
Financial Health2/6
Dividends0/6

TWOU Stock Overview

2U, Inc. operates as an education technology company in the United States and internationally.

2U Competitors

Price History & Performance

Summary of all time highs, changes and price drops for 2U
Historical stock prices
Current Share PriceUS$6.25
52 Week HighUS$34.91
52 Week LowUS$5.66
Beta1.04
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

Sep 02
Is 2U (NASDAQ:TWOU) Using Debt In A Risky Way?

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...

Jul 30

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.

Shareholder Returns

TWOUUS Consumer ServicesUS Market
7D8.1%0.3%-2.5%
1Y-81.8%-30.6%-23.2%

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.

Price Volatility

Is TWOU's price volatile compared to industry and market?
TWOU volatility
TWOU Average Weekly Movement12.0%
Consumer Services Industry Average Movement8.6%
Market Average Movement6.9%
10% most volatile stocks in US Market15.6%
10% least volatile stocks in US Market2.8%

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

FoundedEmployeesCEOWebsite
20085,585Chip Paucekhttps://2u.com

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

How do 2U's earnings and revenue compare to its market cap?
TWOU fundamental statistics
Market CapUS$484.28m
Earnings (TTM)-US$316.00m
Revenue (TTM)US$970.79m

0.5x

P/S Ratio

-1.5x

P/E Ratio

Earnings & Revenue

Key profitability statistics from the latest earnings report
TWOU income statement (TTM)
RevenueUS$970.79m
Cost of RevenueUS$275.44m
Gross ProfitUS$695.35m
Other ExpensesUS$1.01b
Earnings-US$316.00m

Last Reported Earnings

Jun 30, 2022

Next Earnings Date

n/a

Earnings per share (EPS)-4.08
Gross Margin71.63%
Net Profit Margin-32.55%
Debt/Equity Ratio154.4%

How did TWOU perform over the long term?

See historical performance and comparison
We’ve recently updated our valuation analysis.

Valuation

Is TWOU undervalued compared to its fair value, analyst forecasts and its price relative to the market?

Valuation Score

5/6

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

  • Analyst Forecast

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.

TWOU key valuation metrics and ratios. From Price to Earnings, Price to Sales and Price to Book to Price to Earnings Growth Ratio, Enterprise Value and EBITDA.
Key Statistics
Enterprise Value/Revenue1.3x
Enterprise Value/EBITDA-43.7x
PEG Ration/a

Price to Sales Ratio vs Peers

How does TWOU's PS Ratio compare to its peers?

TWOU PS Ratio vs Peers
The above table shows the PS ratio for TWOU vs its peers. Here we also display the market cap and forecasted growth for additional consideration.
CompanyPSEstimated GrowthMarket Cap
Peer Average2.3x
VSTA Vasta Platform
2.1x17.5%US$433.1m
GOTU Gaotu Techedu
0.6x0.7%US$312.9m
ARCE Arco Platform
2.2x21.5%US$604.1m
VTRU Vitru
4.1x31.9%US$599.2m
0.5x5.5%US$484.3m

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.

TWOU PS Ratio vs Fair Ratio.
Fair Ratio
Current PS Ratio0.5x
Fair PS Ratio1.7x

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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Future Growth

How is 2U forecast to perform in the next 1 to 3 years based on estimates from 13 analysts?

Future Growth Score

0/6

Future Growth Score 0/6

  • Earnings vs Savings Rate

  • Earnings vs Market

  • High Growth Earnings

  • Revenue vs Market

  • High Growth Revenue

  • Future ROE


55.4%

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%).


Discover growth companies

Past Performance

How has 2U performed over the past 5 years?

Past Performance Score

0/6

Past Performance Score 0/6

  • Quality Earnings

  • Growing Profit Margin

  • Earnings Trend

  • Accelerating Growth

  • Earnings vs Industry

  • High ROE


-37.2%

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.


Discover strong past performing companies

Financial Health

How is 2U's financial position?

Financial Health Score

2/6

Financial Health Score 2/6

  • Short Term Liabilities

  • Long Term Liabilities

  • Debt Level

  • Reducing Debt

  • 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.


Balance Sheet


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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Dividend

What is 2U current dividend yield, its reliability and sustainability?

Dividend Score

0/6

Dividend Score 0/6

  • Notable Dividend

  • High Dividend

  • Stable Dividend

  • Growing Dividend

  • Earnings Coverage

  • Cash Flow Coverage

Dividend Yield vs Market

2U Dividend Yield vs Market
How does 2U dividend yield compare to the market?
SegmentDividend Yield
Company (2U)n/a
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.


Discover strong dividend paying companies

Management

How experienced are the management team and are they aligned to shareholders interests?

1.8yrs

Average management tenure


CEO

Chip Paucek (52 yo)

10.5yrs

Tenure

US$17,406,594

Compensation

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
How has Chip Paucek's remuneration changed compared to 2U's earnings?
DateTotal Comp.SalaryCompany Earnings
Jun 30 2022n/an/a

-US$316m

Mar 31 2022n/an/a

-US$275m

Dec 31 2021US$17mUS$726k

-US$195m

Sep 30 2021n/an/a

-US$165m

Jun 30 2021n/an/a

-US$158m

Mar 31 2021n/an/a

-US$202m

Dec 31 2020US$6mUS$650k

-US$216m

Sep 30 2020n/an/a

-US$223m

Jun 30 2020n/an/a

-US$312m

Mar 31 2020n/an/a

-US$274m

Dec 31 2019US$7mUS$557k

-US$235m

Sep 30 2019n/an/a

-US$186m

Jun 30 2019n/an/a

-US$55m

Mar 31 2019n/an/a

-US$45m

Dec 31 2018US$17mUS$541k

-US$38m

Sep 30 2018n/an/a

-US$43m

Jun 30 2018n/an/a

-US$47m

Mar 31 2018n/an/a

-US$41m

Dec 31 2017US$3mUS$514k

-US$29m

Sep 30 2017n/an/a

-US$32m

Jun 30 2017n/an/a

-US$24m

Mar 31 2017n/an/a

-US$21m

Dec 31 2016US$3mUS$480k

-US$21m

Sep 30 2016n/an/a

-US$22m

Jun 30 2016n/an/a

-US$23m

Mar 31 2016n/an/a

-US$25m

Dec 31 2015US$3mUS$421k

-US$27m

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.


Leadership Team

Experienced Management: TWOU's management team is not considered experienced ( 1.8 years average tenure), which suggests a new team.


Board Members

Experienced Board: TWOU's board of directors are considered experienced (8.5 years average tenure).


Ownership

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

NasdaqGS:TWOU Recent Insider Transactions by Companies or Individuals
DateValueNameEntityRoleSharesMax Price
15 Feb 22BuyUS$403,886Mark ChernisIndividual43,482US$9.92
15 Feb 22BuyUS$500,106Gregory PetersIndividual49,663US$10.07
14 Feb 22BuyUS$1,037,300Paul MaederIndividual110,000US$9.43
14 Feb 22BuyUS$251,026Christopher PaucekIndividual26,040US$9.64

Ownership Breakdown

What is the ownership structure of TWOU?
Owner TypeNumber of SharesOwnership Percentage
Individual Insiders2,485,0483.1%
Hedge Funds11,128,64314.0%
Institutions66,121,09382.9%

Dilution of Shares: Shareholders have been diluted in the past year, with total shares outstanding growing by 3.8%.


Top Shareholders

Top 25 shareholders own 84.31% of the company
OwnershipNameSharesCurrent ValueChange %Portfolio %
12.37%
ARK Investment Management LLC
9,586,065$59.9m4.35%0.4%
8.64%
The Vanguard Group, Inc.
6,694,996$41.8m-4.54%no data
7.74%
BlackRock, Inc.
5,993,774$37.5m-5.99%no data
7.58%
Greenvale Capital LP
5,874,479$36.7m0.62%4.05%
7.22%
Nikko Asset Management Co., Ltd.
5,595,497$35.0m-2.42%0.02%
6.78%
ArrowMark Colorado Holdings, LLC
5,254,164$32.8m-4.68%0.39%
5.14%
Morgan Stanley, Investment Banking and Brokerage Investments
3,979,108$24.9m46.31%no data
4.29%
Riverbridge Partners, LLC
3,325,984$20.8m0%0.33%
2.45%
D. E. Shaw & Co., L.P.
1,900,804$11.9m34.55%0.02%
1.95%
State Street Global Advisors, Inc.
1,513,073$9.5m1.81%no data
1.95%
BNY Mellon Asset Management
1,507,869$9.4m3.14%no data
1.94%
Jacobs Levy Equity Management Inc
1,500,856$9.4m22.53%0.07%
1.88%
Invesco Ltd.
1,455,163$9.1m-10.66%no data
1.74%
Geode Capital Management, LLC
1,348,428$8.4m13.28%no data
1.66%
Nordea Investment Management AB
1,288,166$8.1m14.94%0.01%
1.5%
Citigroup Inc.,Banking and Securities Investments
1,164,511$7.3m-15.41%0.01%
1.4%
Credit Suisse Asset Management (Switzerland)
1,085,773$6.8m-16.37%0.01%
1.1%
Mirae Asset Global Investments Co., Ltd
856,015$5.4m15.96%0.01%
1.08%
Voloridge Investment Management, LLC
834,117$5.2m52.07%0.03%
1.01%
Healthcare of Ontario Pension Plan Trust Fund
784,500$4.9m87.54%0.02%
1.01%
Credit Suisse, Investment Banking and Securities Investments
780,071$4.9m-9.69%0.01%
1%
Balyasny Asset Management L.P.
773,406$4.8m2200.57%0.02%
0.99%
Cooper Creek Partners Management LLC
765,204$4.8m0%0.6%
0.96%
Northern Trust Global Investments
740,023$4.6m0.01%no data
0.94%
Frontier Capital Management Co LLC
726,981$4.5m-2.8%0.05%

Company Information

2U, Inc.'s employee growth, exchange listings and data sources


Key Information

  • 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


Location

  • 2U, Inc.
  • 7900 Harkins Road
  • Lanham
  • Maryland
  • 20706
  • United States


Listings

TickerExchangePrimary SecuritySecurity TypeCountryCurrencyListed on
TWOUNasdaqGS (Nasdaq Global Select)YesCommon StockUSUSDMar 2014
2U1DB (Deutsche Boerse AG)YesCommon StockDEEURMar 2014
0LHPLSE (London Stock Exchange)YesCommon StockGBUSDMar 2014

Company Analysis and Financial Data Status

All financial data provided by Standard & Poor's Capital IQ.
DataLast Updated (UTC time)
Company Analysis2022/09/30 00:00
End of Day Share Price2022/09/30 00:00
Earnings2022/06/30
Annual Earnings2021/12/31


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.