After initially declining along with the rest of the market this morning, shares of Chegg (CHGG 6.22%) and 2U (TWOU 6.51%) both shot higher this afternoon. As of 3:30 p.m. ET, Chegg stock was up 3.5%, and 2U was up 6.2%.
It's a small reprieve for shareholders as the two online education companies are down a respective 85% and 91% from their all-time highs reached in early 2021.
The reason for today's increase for Chegg and 2U have less to do with each company, and more to do with India's leading education technology start-up, Byju's. Noise in the rumor mill this afternoon contends that the company is in acquisition talks with both Chegg and 2U as it eyes a U.S. buyout. An offer to purchase one (or both) of the two companies is apparently being readied, according to a report from Bloomberg.
Byju's is a fast-growing company and was eyeing an initial public offering (IPO) in the U.S., perhaps via special purpose acquisition company, in late 2021. The global tech bubble has been losing steam in recent months, though, which is the cause of both Chegg and 2U shareholders' pain.
Byju's is a highly acquisitive company, so it makes sense it might be interested in taking over Chegg or 2U for a push into the U.S. education market. Just a week ago, a Byju's subsidiary company, Great Learning, announced it was purchasing Singapore-based Northwest Executive Education, which provides business executive training programs in collaboration with universities like Harvard University, Yale University, Massachusetts Institute of Technology, and the University of California, Berkeley.
The great unwind in online and remote learning as the global economy gradually reopens following 2020 and 2021 pandemic lockdowns is a great opportunity for an industry leader like Byju's. For more recent Chegg and 2U shareholders, though, it could be little more than a consolation prize after the stock crash. However, since its IPO in late 2013, Chegg stock has nearly doubled in value. 2U, which went public in 2014, is down 25% as of this writing.