Stock to Buy: 2U, The Future of Education

TL;DR

2U stock has seen a significant drop of 41% within a few months, but the company has also shown strong long-term growth. It is a small-cap company with a big idea in the distance learning space, and it has successfully partnered with prestigious universities.

Transcript

David Gardner: We're going to go alphabetical by company name. The first one up is 2U, ticker TWOU. Arguably, because this company name literally starts with the number two and the full name of the company is just 2U, you could argue this is not a T stock. But it is a T stock. It is 2U. Let's briefly review where it's been. This stock made a high o... Read More

Key Insights

• 🍉 2U has experienced a significant drop in stock price in the short term, but it has shown strong long-term growth.
• 👨‍💼 The company's business model, which revolves around distance learning partnerships with reputable universities, has been successful.
• 👊 Short attacks can create temporary downturns in stock prices for fundamentally sound companies.

Questions & Answers

Q: What is the main idea behind 2U and how has it been successful?

2U aims to bring distance learning to reputable universities, often at the graduate level. By partnering with esteemed institutions like UCal Berkeley and Georgetown University, it provides access to students who otherwise would not have been able to attend these universities. Additionally, it splits the tuition fees with the universities, creating a mutually beneficial arrangement.

Q: Why has 2U's stock dropped significantly in recent months?

The drop in 2U's stock can be attributed to a short attack, where investors publicly criticize a stock and create doubt in its value. Short attacks often cause a temporary decline in stock prices, but companies with solid fundamentals tend to recover in the long run.

Q: What are some other examples of companies that have experienced short attacks?

Companies like Shopify, Ubiquiti Networks, Take-Two Interactive, Green Mountain, and Tesla have all faced short attacks at some point. These attacks create opportunities for long-term investors to buy stocks at a discount.

Q: What are the main reasons why the speaker likes 2U as an investment opportunity?

The speaker highlights two key reasons for liking 2U as a potential investment. Firstly, despite having a big idea and excellent partnerships with prestigious universities, 2U's market cap remains relatively small at $3 billion. Secondly, the short attack faced by the company presents a discount for long-term investors who believe in the company's potential.

Summary & Key Takeaways

• 2U stock has experienced a sharp decline of 41% from its high of $90 to $53 in just a couple of months.

• However, the stock has shown impressive long-term growth of over 50% since it was first picked in July 2016.

• 2U has built its success on the idea of bringing distance learning to top universities and has formed partnerships with renowned institutions.