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Why 2U Stock Popped Today

By Rich Smith - Updated Feb 12, 2021 at 2:34PM

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Losses weren't as steep as feared, and they're continuing to shrink.

What happened

Shares of online education company 2U (TWOU 17.00%) are looking magna cum laude this afternoon, up 10.4% as of 2 p.m. EST after the company reported earnings last night.

Expected to lose $0.09 per share (pro forma) on $208.2 million in revenue in its fiscal fourth quarter of 2020, 2U instead reported a loss of only $0.06 per share (also pro forma), and sales of $215.3 million.  

Arrow angles up on a green stock chart

Image source: Getty Images.

So what

The news wasn't all good. Although 2U beat on both sales (which were up 32% year over year) and earnings, the company still lost money -- and arguably a whole lot more than a $0.06 per share pro forma loss implies. When calculated according to generally accepted accounting principles (GAAP), 2U actually lost $0.52 per share. Still, that was less than the $0.70, GAAP, per share that it lost in last year's Q4.

For the full year, meanwhile, 2U reported 35% sales growth and $3.22 per share in losses -- 16% less than last year.  

Now what

Looking ahead to fiscal 2021, 2U predicted that this year, its revenue will grow in excess of 17% year over year, to a range of $910 million to $945 million. At the midpoint, that's significantly better than the $912 million Wall Street will be looking for.

2U said it will still lose money, however -- $165 million to $185 million worth, which works out to somewhere between $2.28 and $2.56 per share based on 2U's most recent share count of 72.4 million shares outstanding.

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