LANHAM, MD – 2U (NASDAQ:TWOU), Inc., a provider of educational technology services, has been notified by Nasdaq that its common stock will be delisted following the company's voluntary entry into Chapter 11 bankruptcy proceedings. The notification, received on Monday, indicated that the company’s stock is no longer suitable for listing, with trading to be suspended on August 7, 2024.
The delisting notice follows 2U, Inc.'s commencement of Chapter 11 cases on July 25, 2024, as the company seeks to reorganize under a prepackaged joint plan. In connection with the bankruptcy, 2U, Inc. has secured a Debtor-In-Possession (DIP) Credit Agreement, providing a financing facility of up to $64 million to support operations during restructuring.
The initial draw of $60 million from the DIP Facility occurred on the day of the Interim Order's entry, with the potential for an additional draw of up to $4 million, subject to lender approval and other conditions. This financial arrangement is critical for 2U, Inc. as it navigates the bankruptcy process and works towards a reorganization plan.
The company, which has no intention of appealing the delisting decision, will see its common stock removed from Nasdaq and registration with the SEC. This development marks a significant shift for the educational tech firm, which has faced challenges leading up to the filing for bankruptcy protection.
In other recent news, 2U, Inc., an educational technology services provider, has experienced significant developments. Following the company's voluntary entry into Chapter 11 bankruptcy proceedings, Nasdaq has notified 2U, Inc. that its common stock will be delisted. To support operations during restructuring, 2U, Inc. has secured a Debtor-In-Possession (DIP) Credit Agreement, providing a financing facility of up to $64 million.
In addition, the company executed a 1-for-30 reverse stock split, a move approved by the Board of Directors and stockholders. This corporate action combined every thirty shares of issued and outstanding common stock into one new share.
Further, 2U, Inc. reported first-quarter 2024 financial results that surpassed market expectations, recording revenue of $198.4 million and an adjusted EBITDA of $17.3 million. Despite a decrease in revenue compared to the same period last year, new enrollment numbers and operational efficiency initiatives suggest a strong position for future growth. The company has reaffirmed its full-year 2024 revenue guidance of $805 million to $815 million and adjusted EBITDA guidance of $120 million to $125 million.
Baird revised its price target for 2U to $1.00 from the previous $1.50, maintaining a Neutral rating on the stock. Meanwhile, Cathie Wood's ARK ETFs reduced their stake in 2U, selling a total of 2,579 shares. These developments reflect the ongoing adjustments to investment strategies in response to market dynamics.
InvestingPro Insights
In light of 2U, Inc.'s recent move into Chapter 11 bankruptcy proceedings and subsequent delisting notification, specific metrics from InvestingPro provide additional context to the company's financial health. The real-time data indicates a market capitalization of just $8.15 million, reflecting the significant diminution in the company's value. Despite a challenging financial performance, 2U, Inc. has maintained impressive gross profit margins, reported at 72.93% for the last twelve months as of Q1 2024.
Moreover, the company's stock has recently been trading at a very low Price / Book multiple of 0.05, which might attract investors looking for potentially undervalued assets. However, this comes with the caveat of high price volatility and significant price declines over various periods, including a 97.99% drop in the one-year price total return as of the date provided. These InvestingPro Tips suggest a mixed picture: on one hand, there's the appeal of low valuation multiples and strong gross margins; on the other, the reality of declining sales, lack of profitability, and extreme market volatility.
For investors seeking a deeper analysis, InvestingPro offers additional tips on 2U, Inc., which can provide further insights into the company's financial position and stock performance. Readers interested in exploring these aspects further can find additional tips on the InvestingPro platform.
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