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Why Shares of 2U Jumped Today

By Timothy Green - Mar 4, 2020 at 4:19PM

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The education technology stock surged as the broader market rallied.

What happened

Shares of 2U (TWOU 17.00%) rose on Wednesday on a strong day for the broader market. While there was no company-specific news for the education-focused software-as-a-service provider, the stock was up 8.7% at 3:30 p.m. EST today.

So what

Back in January, Bloomberg reported that 2U was considering selling itself after an activist investor pushed for the company to explore strategic alternatives. The stock has crashed more than 70% since peaking in 2018.

A rising stock chart.

Image source: Getty Images.

There wasn't any update on the strategic alternative front Wednesday, but that development is certainly in the back of investors' minds.

In February, the company reported solid fourth-quarter results, beating analyst estimates for both revenue and earnings. That report jump-started a rally that is now continuing on a very strong day for the stock market.

Now what

No-news rallies like this one are usually just noise. For investors, what matters is the company's performance in the long run. Revenue is growing quickly, with 2U expecting growth between 26% and 30% in 2020. But it expects to post a large net loss as high as $220 million. In 2019, 2U spent a whopping 60% of revenue on sales and marketing.

With the stock market making big moves almost every day, expect more volatility for 2U in the coming weeks.

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