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2U to enact 1-for-30 reverse stock split to meet Nasdaq rules

EditorBrando Bricchi
Published 10/06/2024, 21:22

LANHAM, Md. - 2U, Inc. (NASDAQ:TWOU), an online education platform provider, announced today that it will execute a 1-for-30 reverse stock split. This decision, approved by the company's Board of Directors, follows authorization from shareholders on May 20, 2024. The reverse stock split is scheduled to take effect at 5 p.m. Eastern Time on June 13, 2024, with shares expected to begin trading on a split-adjusted basis when the market opens on June 14, 2024.

The company aims to increase the per-share market price of its common stock to comply with the minimum bid price requirement for continued listing on The Nasdaq Global Select Market. The reverse stock split will consolidate every 30 shares of issued and outstanding common stock into one share. Although the number of shares will decrease, stockholders will retain the same ownership percentage post-split, barring minor adjustments due to fractional shares. Shareholders will not receive fractional shares but will instead be compensated with a cash payment for any resulting fractional share interests.

Equiniti Trust Company, LLC is appointed as the exchange agent and transfer agent for the reverse stock split process. Shareholders with certificated shares will receive instructions on exchanging their pre-split shares for a statement of ownership. Those holding shares electronically or through a nominee will see their holdings automatically adjusted and will be paid for any fractional shares in accordance with their institution's procedures.

The details of the reverse stock split were included in 2U's definitive proxy statement filed with the U.S. Securities and Exchange Commission on April 8, 2024. The press release from 2U, Inc. is the source of this information.

In other recent news, online education provider 2U, Inc. reported first quarter 2024 financial results that surpassed market expectations, with 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 also reaffirmed its full-year 2024 revenue guidance of $805 million to $815 million and adjusted EBITDA guidance of $120 million to $125 million.

In other developments, Baird has revised its price target for 2U to $1.00 from the previous $1.50, while maintaining a Neutral rating on the stock. This adjustment follows the company's first-quarter results and the affirmation of its guidance for the full year.

Cathie Wood's ARK ETFs have also made some adjustments to their holdings, divesting a total of 141,234 shares in Teladoc (NYSE:TDOC) Health Inc and reducing their stake in 2U Inc by selling 2,579 shares. This move comes after a series of sales in 2U over the past week, indicating a potential strategic shift away from the online education provider.

These recent developments reflect the ongoing adjustments to investment strategies in response to market dynamics, and are likely to influence future decisions for both companies and investors.

InvestingPro Insights

In light of 2U, Inc.'s recent announcement regarding a reverse stock split, it's worthwhile to consider some key financial metrics and analyst insights from InvestingPro. The company's market capitalization stands at a modest $23.87 million, reflecting the challenges it has faced in the market. With a Price / Book ratio of 0.14 as of the last twelve months leading up to Q1 2024, the stock is trading at a low multiple, which could attract investors looking for potentially undervalued companies.

Despite a gross profit margin of 72.93%, signaling the company's ability to maintain a significant markup on its services, analysts have expressed concerns about the company's future profitability. Notably, the stock has experienced high price volatility and has significantly underperformed over the last year, with a 93.4% decline in the one-year price total return. This could be indicative of investor sentiment and market conditions affecting the stock.

For those interested in a deeper dive into 2U, Inc.'s performance and prospects, InvestingPro offers additional insights. There are currently 13 additional InvestingPro Tips available, which could provide valuable context for the company's strategic decisions, such as the reverse stock split. Investors looking to leverage these insights can take advantage of a special offer using coupon code PRONEWS24 to get an additional 10% off a yearly or biyearly Pro and Pro+ subscription.

As shareholders and potential investors evaluate the implications of the reverse stock split, these InvestingPro metrics and tips can serve as a useful resource for making informed decisions in the context of 2U, Inc.'s financial landscape.

This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.

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