For all the talk last year about the rise of the for-profit education industry, including in the pages of Education Week, stocks of publicly traded education companies were generally out of favor on Wall Street.
And initial public offerings of stock for some closely watched companies did not exactly “pop,” or jump in value.
For example, Edison Schools Inc., the New York City-based manager of public schools, went public on Nov. 11 at $18 a share. The offering price was below the target range of $21 to $23 a share, signaling soft demand in the market, analysts said at the time. After a brief rise from its offering price, Edison shares drifted downward, bottoming out at $12.75 early this year.
The IPOs last fall of eCollege.com, an online distance-learning company, and Smarterkids.com, an online retailer of educational toys and materials, also were disappointing.eCollege.com, an online distance-learning company, and Smarterkids.com, an online retailer of educational toys and materials, also were disappointing.
But recently, education IPOs have been faring better on the stock market.
The Lightspan Partnership Inc., which develops educational software and online content for use at home and in school, went public on Feb. 10 at $12 a share. The price rose as high as $25.375 in March before settling in the $18-to-$20 range in recent weeks.
Riverdeep Group PLC, an Irish educational software concern, went public on March 9 at $20 a share. The stock rose as high as $72.50 a share before falling back to the high $40s in recent weeks.
Gerald R. Odening, a managing director at the investment bank Hambrecht & Quist LLC in New York City, says investors are growing comfortable with the idea of for-profit education, but they are still looking closely at each education IPO.
“Investors have already become very finicky” in looking at the sector, he said last week. “They usually don’t get less finicky.”
Meanwhile, one of those stocks that started out poorly has rebounded in recent weeks. Edison Schools was in the $23-to-$24 range last week, closing at $23.125 on March 28. “People have taken a second look and said maybe there is a little bit more valuation there,” Mr. Odening said.
—Mark Walsh mwalsh@epe.org
