Is 2U’s Stock A Buy After Recent Fall?

TWOU: 2U logo

2U Inc. stock’s (NASDAQ: TWOU) has fallen by 7% since the end of 2020. 2U is an American educational technology company that contracts with non-profit colleges and universities and offers online degree programs. The company’s stock price has been fluctuating this year with a 52-week high of $59 in February 2021. The stock fell from that level post FY 2020 earnings of the company wherein the investors were disappointed with the future growth outlook. The stock recovered back to $46 before the Q2 2021 results but fell by around 20% to $37 in the two weeks post results, as the investor expectation of an increase in revenue and earnings guidance for 2021 was not matched. The company has seen a good revenue growth over recent years which historically has been a dominant factor in its price movement. We believe the stock has a moderate upside after the recent fall and the potential uncertainty due to the Covid outbreak might favor the online educator. Our dashboard Buy or Sell 2U stock has the underlying numbers.

The global spread of coronavirus has led to lockdown in various cities across the globe, which has affected industrial and economic activity. Due to the stay-at-home orders there has been an increase in the demand of online education technology. 2U’s Q2 2021 results confirmed the same as revenue increased to $237 million, up by 30% y-o-y. Degree Program Segment revenue grew 26% to $146 million driven by a 31% increase in full course equivalent (“FCE”) enrollments. Alternative Credential Segment revenue increased 36% to $91 million, driven by growth of FCE enrollments by 16%. Operating margin improved to -16% for Q2 2021 compared to -26% in the same period of the previous year. We believe that continued revenue growth and an improvement in operating margin can lead to a moderate upside in 2U’s stock from current levels.

Relevant Articles
  1. JetBlue Stock Looks Unlikely To Bounce Soon After 17% Fall Last Month
  2. Southwest Airlines Stock Has Lost More Than 50% Since 2017- Here’s Why
  3. What’s Next For Expedia’s Stock?
  4. This Aerospace Company Appears To Be A Better Pick Over Textron Stock
  5. Is Hartford Financial Stock Fairly Priced?
  6. Are Digital Ad Stocks Oversold?


What if you’re looking for a more balanced portfolio instead? Here’s a high-quality portfolio that’s beaten the market since 2016.

See all Trefis Price Estimates and Download Trefis Data here

What’s behind Trefis? See How It’s Powering New Collaboration and What-Ifs For CFOs and Finance Teams | Product, R&D, and Marketing Teams