K12 Shares Nosedive

K12 Shares Nosedive

NOT MAKING THE GRADE: Looks like Whitney Tilson, the outspoken hedge fund manager and education reformer who lambasted K12 Inc., may have been right with his forecast. Shares of the company plunged nearly 40% after disclosing numbers that fell short of analyst expectations. (At the time of writing, K12 shares were hovering above $18, down from a 1-year high of $38.14.) Enrollments grew at 5.7%, below the 14.6% that some expected. And the company's anticipated revenue of $905 million to $925 million for the year are short of the expected $962.6 million.

Oddly enough, Tilson, who recently met K12 CEO Ron Packard at a party, says Packard's a great guy. Writes Tilson in his newsletter: "I liked Ron. I found him very personable, I think he honestly believed everything he said to me, he didn’t get angry or defensive when I pushed him on some pretty tough stuff I’ve heard and written about K12." Tilson isn't quite done shorting the stock yet: "I don’t think K12 has come to grips with the reality that it doesn’t just need to slow its growth, but must actually shrink its enrollment--and not by a little, but by a lot--to weed out the students who are not appropriate for a full-time online school and thus are not engaging or succeeding." But if the company takes such steps (and Tilson goes into some detail), the astonishing could happen: 

"Once K12 takes these steps, I will cover my short – and might even go long the stock!" Ah, traders. Short today, long tomorrow. 

Stay up to date on edtech. Sign up to have top stories delivered weekly.

Who we are

EdSurge helps schools find, select and use the right technology to support all learners.
© 2011-2016 EdSurge Inc. All rights reserved. Every student succeeds.