NEW YORK, June 14, 2024 (GLOBE NEWSWIRE) — Bragar Eagel & Squire, P.C., a nationally recognized stockholder rights law firm, announces that a class action lawsuit has been filed against 2U (NASDAQ:), Inc. (2U or the Company) (NASDAQ: TWOU) in the United States District Court for the District of Maryland on behalf of all persons and entities who purchased or otherwise acquired 2U securities between February 9, 2022 and February 12, 2024, both dates inclusive (the Class Period). Investors have until August 12, 2024 to apply to the Court to be appointed as lead plaintiff in the lawsuit.
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On November 9, 2023, after the market closed, the Company announced that 2U and USC would wind down their 15-year collaboration in the Company’s major programs, and that USC would pay approximately $40 million in connection with this exit. The Company also announced it would recognize a total of $80 million in the fourth quarter related to partners seeking a negotiated exit from certain degree programs, which the Company euphemistically referred to as portfolio management activities. The Company disclosed these portfolio management activities would offset a 21% decrease in full course equivalent enrollment, which was primarily driven by the impact of [its] transition to a new marketing framework in mid-2022. The Company also revealed fiscal quarterly results, showing Degree Program revenue was flat year over year, that total revenue had decreased 1%, and that the Alternative Credential Segment revenue decreased 3%.
On this news, 2U’s share price fell $1.35, or 56.72% to close at $1.03 on November 10, 2023, on unusually heavy trading volume.
Then, on February 12, 2024, after the market closed, 2U disclosed that due to the Company’s debt, there is substantial doubt about its ability to continue as a going concern. The Company further disclosed it recognized $88.0 million of revenue from portfolio management activities (i.e., fees negotiated for early partnership contract termination) in the year and it would assume another $10 million from such activities in the first quarter of 2024 and at least $15 million in full-year 2024. The Company also announced its full year revenue of $946 million, significantly missing the Company’s guidance of $965 million to $990 million, and revealed Degree Program Segment revenue, Alternative Credential Segment Revenue, and total revenue, all decreased 2% year over year. The Company also issued full year 2024 guidance, estimating revenue would continue to decline from $946 million, to $805 million to $815 million.
On this news, 2U’s share price fell $0.55 or 59.33%, to close at $0.37 on February 13, 2024, on unusually heavy trading volume.
The complaint filed in this class action alleges that throughout the Class Period, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors: (1) the Company was unable to sustain relationships with key universities and organizations; (2) as a result, certain degree programs and partnerships failed to materialize or were cancelled; (3) the Company’s transition to a platform company would lead to a decrease in full course equivalent enrollments; (4) accordingly, the Company had overstated the stability and/or longevity of its contractual agreements and/or revenue sources; and (5) that, as a result of the foregoing, Defendants’ positive statements about the Company’s business, operations, and prospects were materially misleading and/or lacked a reasonable basis.
If you purchased or otherwise acquired 2U shares and suffered a loss, are a long-term stockholder, have information, would like to learn more about these claims, or have any questions concerning this announcement or your rights or interests with respect to these matters, please contact Brandon Walker or Marion Passmore by email at investigations@bespc.com, telephone at (212) 355-4648, or by filling out this contact form. There is no cost or obligation to you.
About Bragar Eagel & Squire, P.C.:
Bragar Eagel & Squire, P.C. is a nationally recognized law firm with offices in New York, California, and South Carolina. The firm represents individual and institutional investors in commercial, securities, derivative, and other complex litigation in state and federal courts across the country. For more information about the firm, please visit www.bespc.com. Attorney advertising. Prior results do not guarantee similar outcomes.
Contact Information:
Bragar Eagel & Squire, P.C.
Brandon Walker, Esq.
Marion Passmore, Esq.
(212) 355-4648
investigations@bespc.com
www.bespc.com
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