Grand Canyon slides as Citron Research sees stock trading to $30 in 18 months
Calling it its "favorite short in years," Andrew Left's Citron Research said Grand Canyon Education (LOPE) is "dead or a fraud" and argued that the stock will trade to $30 in the next 18 months. $30 PRICE TARGET SET BY CITRON: In a new short report, Citron Research said that it believes management of Grand Canyon has been "both incompetent and deceitful in its ability to transform the school to adapt to the rapidly changing for profit education space," and has failed to deliver or any of the promises of innovation to Wall Street and "it has finally caught up to them." According to the report, OPM industry leading 2U (TWOU) "discussed the surprisingly rapid adoption and mainstreaming of online education from which there is no escape, and which will send (Grand Canyon) stock down 70% in the next 18 months. The reason the share price is continuing to fall is once the business turns, and it probably has, (Grand Canyon) does not have a durable revenue base to depend on. Even their happiest of customers leave them every 2.5 years." The stock of Grand Canyon "will trade to $30 in the next 18 months. It is inevitable, the only variable is when management is going to start telling the truth about industry headwinds. (...) The only way Grand Canyon Education will survive the new norm is by lowering prices and lowering admission standards. More importantly, the company should trade at a discount to other online educators because of its failure to innovate and its dependence to one customer. (...) Either way, (Grand Canyon) is overvalued," Citron contended. PRICE ACTION: In afternoon trading, shares of Grand Canyon Education have dropped almost 0.5% to $110.68.