Online Courses from 2U

Dear Mr. Berko: I’ve been a member of an eight-person investment club for 11 years that meets once a month. We get into some spirited discussions and have a portfolio of 17 stocks worth almost $210,000 and our portfolio has a cost basis of $143,000. Our biggest gainer was 150 shares of CF Industries that you recommended in December of 2006 at $26, that we sold at $301 in March 2015. Now I’m tasked with researching a company named 2U that provides online courses to colleges and universities. Please give me your thoughts on 2U. — WT: Detroit, MI

Dear WT: I like investment clubs. Clubs, like yours, are a wonderful way to learn about the market in a warm, companionable atmosphere of good friends.

2U (TWOU-$35) sells cloud-based software as a service (SaaS) to colleges. 2U’s SaaS platform solutions provide online campuses and web-based mobile applications that enable colleges to offer online courses in algebra, psychology, sociology, English, history, literature, physics, etc. 2U’s brilliant platform serves as a data hub for scheduling courses, course enrollment and faculty admissions review while automating the admission and online application process for prospective students. It also encourages colleges to create sterile, cheaper, digital versions of themselves. The aggressive growth of online education signals the demise of traditional professor-led courses and green, leafy university campuses with weathered, old brick buildings. The online concept acknowledges a dumbing down of the learning process and simplifies course content so students, whose high schools failed to prepare them for college, can get a diploma.

It’s obvious that traditional college courses are now too difficult for most American students. So considering the huge numbers of students who lack the skills to earn a diploma, online courses provide equal outcomes for Americans whose aptitudes preclude them from earning degrees at traditional colleges. Of course, online courses cost enormously less than a professor’s planned lecture.

Online learning vs traditional learning is creating a two-tiered system — degrees for those who can and those who can’t. By lowering learning requirements, 2U allows colleges to maintain huge enrollments, meet federal guideline graduation numbers to keep the largess flowing through $1.6 trillion in student loans. Today, everybody can get a BS, MBA or Ph.D. online. Online education offers Americans easy diplomas which pleases voters and Congress. And analysts at Reuters, Credit Suisse, Oppenheimer and Goldman Sachs are also pleased. Higher graduation rates, made possible by 2U’s platform encourages, Congress to increase student loan funding, enabling colleges to purchase more 2U’s software. And that’s why five of Wall Street’s finest have a “Strong Buy” recommendation with a median target price of $37 and a high target price of $46 in the next 12 months, which I think is ridiculous. But if colleges become free, online courses will explode and so will TWOU.

2U hasn’t earned a centime since it opened for business in 2008 and won’t be profitable this year or in 2017. Goldman Sachs and Oppenheimer took 2U public in March 2015, selling 9,175,000 shares at $13. It was an unexciting IPO. During the first week, 2U traded below its IPO price before gaining traction and rising to $39 six months later. This Landover, Maryland, company has 1,026 employees, zero debt, a float of 32 million shares and an absurd market cap of $1.6 billion! In 2015, 2U posted $150 million in revenues and lost 63-cents a share. This year the Street expects 2U to lose 34-cents a share on revenues of $200 million and in 2017 revenues might reach $264 million but 2U will lose money again.

Unlike colleges in Europe or Asia that have rigid admissions requirements, a college diploma is now an American entitlement. Therefore 2U represents the future of public colleges in the U.S. where policies support quantity over quality. While I have unkind feelings about online education (the diminution of traditional learning), I recognize 2U’s enormous growth potential and many believe TWOU could trade much higher. However, I have significant reservations about the qualifications of our next generation’s physicians, lawyers, engineers, veterinarians and other professionals.

Please address your financial questions to Malcolm Berko, P.O. Box 8303, Largo, FL 33775, or email him at mjberko@yahoo.com. To find out more about Malcolm Berko and read features by other Creators Syndicate writers and cartoonists, visit the Creators Syndicate website at www.creators.com.


You May Also Like

SFMA Hosts Recognition of Excellence Ceremony on June 20

Attendees are encouraged to register.

Miami Swim Week Nears Highly-Anticipated Return

The event aims a global spotlight on fashion, culture, and sustainability.

Miami Swim Week
Renowned Broward County Business Leader, Susie Levan, Dies at 73

The wife of Alan Levan, Chairman of BBX Capital, Inc., left an indelible mark on the community.

Breaking News: Greater Fort Lauderdale Alliance’s Mid-Year Meeting Unveils Local Economic Insights

Over 600 members and guests attended the event at the Seminole Hard Rock Hotel & Casino in Hollywood.

Other Posts

How Can You Use Analytics To Acquire More Customers?

Marcelo Salup, CEO of Performist U.S., provides insight.

Fort Lauderdale International Film Festival Hosts Extravagant Kentucky Derby Event

Experience the annual horse race on a 30-foot screen.

South Florida Leaders Forge Alliance to Advance World Cup 2026 Plans

The collaboration includes four women mayors.

Hard Rock Live Presents On Your Feet! The Story of Emilio and Gloria Estefan

The Broadway musical production will have four shows starting April 11.

Drew Limsky

Drew Limsky



Drew Limsky joined Lifestyle Media Group in August 2020 as Editor-in-Chief of South Florida Business & Wealth. His first issue of SFBW, October 2020, heralded a reimagined structure, with new content categories and a slew of fresh visual themes. “As sort of a cross between Forbes and Robb Report, with a dash of GQ and Vogue,” Limsky says, “SFBW reflects South Florida’s increasingly sophisticated and dynamic business and cultural landscape.”

Limsky, an avid traveler, swimmer and film buff who holds a law degree and Ph.D. from New York University, likes to say, “I’m a doctor, but I can’t operate—except on your brand.” He wrote his dissertation on the nonfiction work of Joan Didion. Prior to that, Limsky received his B.A. in English, summa cum laude, from Emory University and earned his M.A. in literature at American University in connection with a Masters Scholar Award fellowship.

Limsky came to SFBW at the apex of a storied career in journalism and publishing that includes six previous lead editorial roles, including for some of the world’s best-known brands. He served as global editor-in-chief of Lexus magazine, founding editor-in-chief of custom lifestyle magazines for Cadillac and Holland America Line, and was the founding editor-in-chief of Modern Luxury Interiors South Florida. He also was the executive editor for B2B magazines for Acura and Honda Financial Services, and he served as travel editor for Conde Nast. Magazines under Limsky’s editorship have garnered more than 75 industry awards.

He has also written for many of the country’s top newspapers and magazines, including The New York Times, Washington Post, Los Angeles Times, Miami Herald, Boston Globe, USA Today, Worth, Robb Report, Afar, Time Out New York, National Geographic Traveler, Men’s Journal, Ritz-Carlton, Elite Traveler, Florida Design, Metropolis and Architectural Digest Mexico. His other clients have included Four Seasons, Acqualina Resort & Residences, Yahoo!, American Airlines, Wynn, Douglas Elliman and Corcoran. As an adjunct assistant professor, Limsky has taught journalism, film and creative writing at the City University of New York, Pace University, American University and other colleges.