Analysts React to Leadership Transitions at 2U

Shares of 2U, Inc. (NASDAQ:TWOU) fell 4% intra-day today following the announcement that Paul Lalljie, the current Chief Financial Officer, will replace Christopher Paucek as Chief Executive Officer. Matt Norden, the Chief Legal Officer, will take over as CFO.

Analysts described the leadership change as sudden but not entirely unexpected, considering the company's recent challenges. KeyBanc analysts expressed surprise at Paucek's departure, citing his long tenure with 2U. However, they acknowledged the company's significant growth decline, increased focus on near-term debt obligations, and continued share price drop. The analysts view the appointment of Lalljie as CEO as a strategic move by 2U, aimed at enhancing operational efficiency and driving profitable growth.

Morgan Stanley analysts also weighed in on the executive shake-up. They noted that, despite the abruptness, the change was not surprising given 2U's ongoing struggles with growth and profitability. They specifically referenced challenges that have arisen since the company's acquisition of edX, an online learning platform. This leadership transition seems to be a response to these broader issues faced by 2U.