Wall Street Reacts

Corporations are eager to exploit the K12 market, but Wall Street doubts the investment:

Total K-12. Inc. Executive Compensation skyrocketed 96% in 2013. This increase crowned an ever-upwards trend in the face of the corporation’s stock price, which meandered for 5 years, ending about where it began:

Morning

MorningstarAdvisor’s Executive Compensation summary

That, together with disappointing revenue growth, led to it’s stock price hitting a 52 week low in October of 2014.


 

“K12’s phone banks have figured out a way to target dropouts and special ed kids. They will sign up anyone – as long as that warm body signs in periodically, K12 can draw enrollment money from the district.

“It isn’t for some noble reason – it’s because these kids demand the least amount of education. These aren’t kids and parents who will be knocking on K12’s doors saying, ‘Hey, you need to do more for my kid.’”K12, Inc Behavior Scares Off Investors, Whitney Tilson, Managing Director of T2 Partners

“… just a year ago News Corp. announced its intention to enter the for-profit K-12 education industry, which Rupert Murdoch called “a $500 billion sector in the US alone that is waiting desperately to be transformed.” How Online Learning Companies Bought America’s Schools, The Nation, December 5, 2011

“’I’ve never seen it like this in ten years,’ remarked Ron Packard, CEO of … K12 Inc. ‘It’s almost like someone flipped a switch overnight and so many states now are considering either allowing us to open private virtual schools’ How Online Learning Companies Bought America’s Schools, The Nation, December 5, 2011

“Despite its rapid revenues and earnings growth, cash flow issues and societal pressures make me skeptical of K-12’s performance over the next 1-2 years.” Is K-12 Inc. The Future Of Education? Here’s Why I’m Skeptical, Morningstar.com, November 30, 2011

“[Just as for-profit college] degrees lack any significant value in the private sector job market, K-12, Inc. faces the same problem with its [diploma’s] credibility to the admission departments of major universities. K-12 lacks a substantial track record of placing its students in prestigious universities. Until K-12 has successive classes of college placement on par with top public schools, ambitious and diligent parents / students will not allow their child (or choose to attend themselves) to opt out of traditional school.” Is K-12 Inc. The Future Of Education? Here’s Why I’m Skeptical, Morningstar.com, November 30, 2011

“Based on the schooling experience of both myself and younger family members, online classes are still largely regarded as an easy way out of regular classes. The primary reason this stigma remains is that there is no way to prevent cheating. I would not recommend buying here and would short if the stock breaks above $30 again.” Is K-12 Inc. The Future Of Education? Here’s Why I’m Skeptical, Morningstar.com, November 30, 2011

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