NEW YORK--(BUSINESS WIRE)--Robbins Geller Rudman & Dowd LLP (http://www.rgrdlaw.com/cases/2uinc/) today announced that a class action has been commenced on behalf of purchasers of 2U, Inc. (NASDAQ:TWOU) common stock during the period between February 26, 2018 and July 30, 2019 (the “Class Period”). This action was filed in the Southern District of New York and is captioned Chinn v. 2U, Inc., et al., No. 19-cv-07479.
The Private Securities Litigation Reform Act of 1995 permits any investor who purchased 2U common stock during the Class Period to seek appointment as lead plaintiff. A lead plaintiff acts on behalf of all other class members in directing the litigation. The lead plaintiff can select a law firm of its choice. An investor’s ability to share in any potential future recovery is not dependent upon serving as lead plaintiff. If you wish to serve as lead plaintiff, you must move the Court no later than 60 days from August 7, 2019. If you wish to discuss this action or have any questions concerning this notice or your rights or interests, please contact plaintiff’s counsel, Brian Cochran at 800/449-4900 or 619/231-1058, or via e-mail at firstname.lastname@example.org. You can view a copy of the complaint as filed at http://www.rgrdlaw.com/cases/2uinc/.
The complaint charges 2U and certain of its officers with violations of the Securities Exchange Act of 1934. 2U is an educational technology company that partners with nonprofit colleges and universities to offer online degree programs through a cloud-based “software-as-a-service” platform.
The complaint alleges that during the Class Period, defendants issued materially false and misleading statements regarding 2U’s business model and cash flows, as well as the competitive pressures facing 2U. Specifically, defendants failed to disclose that: (i) 2U’s business model needed to undergo substantial adjustment to compete in an increasingly saturated online education market and the Company’s cash flows were inadequate for maintaining its purported growth trajectory; (ii) the Company would not be able to take advantage of promised economies of scale, as the cost of creating content and attracting and retaining students increased, rather than diminished, as the Company grew in size and complexity; (iii) the growth rate in revenue from enrollments was decelerating and had plateaued; and (iv) as a result of the foregoing, 2U was experiencing accelerating losses, its business plan was unsustainable, and defendants lacked any reasonable basis for 2U’s Class Period projections and financial forecasts. As a result of defendants’ false statements, the price of 2U common stock was artificially inflated to more than $98 per share during the Class Period.
Then on July 30, 2019, 2U released disappointing financial results for the second quarter of 2019. Defendants explained that 2U was “moderating [its] outlook for the business in the short term” and expected to suffer losses of between $157.5 million and $151.5 million for the year, a 300% year-over-year increase. 2U’s CEO also disclosed that the Company needed to significantly curtail expansion plans that had been announced only a few months earlier, in November 2018, stating that the growth story had been a “mistake” and he now needed to “level set” with the investment community. On this news, the price of 2U stock declined, falling to a close of $12.80 per share, a one-day decline of 65% and a decline of more than 86% from the stock’s Class Period high of $98 per share.
Plaintiff seeks to recover damages on behalf of all purchasers of 2U common stock during the Class Period (the “Class”). The plaintiff is represented by Robbins Geller, which has extensive experience in prosecuting investor class actions including actions involving financial fraud.
Robbins Geller Rudman & Dowd LLP is one of the world’s leading law firms representing investors in securities litigation. With 200 lawyers in 9 offices, Robbins Geller has obtained many of the largest securities class action recoveries in history. For six consecutive years, ISS Securities Class Action Services has ranked the Firm in its annual SCAS Top 50 Report as one of the top law firms in the world in both amount recovered for shareholders and total number of class action settlements. Robbins Geller attorneys have helped shape the securities laws and have recovered tens of billions of dollars on behalf of aggrieved victims. Beyond securing financial recoveries for defrauded investors, Robbins Geller also specializes in implementing corporate governance reforms, helping to improve the financial markets for investors worldwide. Robbins Geller attorneys are consistently recognized by courts, professional organizations and the media as leading lawyers in the industry. Please visit http://www.rgrdlaw.com for more information.