What happened
Shares of 2U (TWOU) popped as much as 20% early Tuesday, according to data provided by S&P Global Market Intelligence, then settled to trade up around 15% as of 3 p.m. ET following an insider share purchase from the company's recently appointed chief product officer.
So what
According to an SEC filing late Monday, 2U CPO Aaron McCullough acquired 45,700 shares of the online education platform company on Aug. 17 at an average price of $3.14 per share. The purchase increased McCullough's position in it by 15% to 348,524 shares -- a stake worth roughly $1.16 million as of this writing, or a little more than 0.4% of 2U's total shares outstanding. McCullough was appointed to the CPO position in mid-June.
Many investors view such insider purchases as an encouraging sign that executives believe their company's stock is undervalued.
Now what
The timing of McCullough's purchase was no coincidence. 2U shares are still down around 47% year to date as of this writing, including a nearly 29% single-day drop earlier this month after the company announced disappointing second-quarter results and significantly lowered its profit outlook for the year. At the same time, 2U management noted those results were primarily a consequence of a purposeful strategy to shift revenues to later in the year, and promised to ramp up the launches of new degree programs starting in 2024.
Stock traders often aren't willing to hurry up and wait. But if 2U is able to deliver on those promises in the coming year, its stock could indeed be a bargain for investors willing to buy now and wait for improved growth and profitability to materialize.
