Landover-based online education company 2U made its debut on the stock market Friday morning, joining a rush of companies pursuing public offerings as investors grow more bullish about the state of the economy.
Though there was no major spark when the company’s stock first listed on the Nasdaq Global Select Market under the ticker symbol “TWOU,” its share price rose gradually throughout the day and ended Friday up 7.5 percent at $13.98.
An Ernst & Young report published last week shows the number of U.S. companies to go public during the first quarter was double the number in the same quarter last year. The life sciences and technology sectors were big drivers of that growth.
Low-range IPOs of less than $100 million also dominated the quarter, according to the report, a sign that the Jumpstart Our Business Startups Act is making it easier for small firms to go public by easing their financial-disclosure requirements and accounting practices.
2U sold 9.175 million shares at $13 apiece, bringing in $119.3 million Friday. 2U will pocket proceeds from 8 million of those shares for a total of $104 million. The remaining stock was sold by other shareholders.
“As an entrepreneur, this is certainly a day that one has thought of or dreamed of in various cases, and I do believe we’re at the beginning of a long journey for the company,” chief executive Chip Paucek said.
The IPO’s underwriters have the option to purchase an additional 1,376,250 shares of common stock at $13 each within the next 30 days.
Goldman Sachs and Credit Suisse Securities acted as joint book-running managers for the offering. Needham & Co., Oppenheimer & Co. and Pacific Crest Securities served as co-managers.
Founded in 2008, 2U creates online versions of graduate degree programs offered by universities including the University of Southern California, the University of North Carolina at Chapel Hill, Georgetown University and the University of California at Berkeley.
Paucek said nearly 10,000 students have enrolled in online programs since 2U’s inception, studying subjects including nursing, business and education. The programs count 2,500 graduates to date.
“We feel like the opportunity is there for us to continue to work with schools to build what we think are the world’s best online degree programs,” Paucek said. “We believe we touched a nerve by, for the first time, making online students equal to on-campus students.”
The business model is simple: The online degree programs established by 2U enable universities to enroll students and collect tuition without the costs and physical limitations of maintaining brick-and-mortar classrooms.
2U pays to set up the program’s technological backbone, then shares in the revenue those programs generate. The universities provide the faculty and course materials and make all admissions decisions.
Since its creation, 2U has expanded into undergraduate courses.
Filings show the company has increased its revenue in each of the past three years, including $83.1 million in revenue in 2013. It has posted net losses for each of those years, including a net loss of $28 million in 2013.
Follow reporter Steven Overly on Twitter: @StevenOverly