Pearson Share Prices Tumble on Worries About Online Ed. Prospects

Associate Editor

The share prices of global education giant Pearson dropped more precipitously than any other stock on the Financial Times Stock Exchange 100 Index on Thursday, a fact the publication attributed to a brokerage’s concerns about the company’s ability to expand virtual schools.

Exane BNP Paribas’ is the brokerage that raised a red flag about Pearson, based on a lack of new school openings, caps on enrollment and regulatory issues facing the sector, the Financial Times reported.

A 3-month snapshot of Pearson's share prices, from January 6 to April 6, 2017.
A 3-month snapshot of Pearson’s share prices, from January 6 to April 6, 2017.

The newspaper cited Education Week‘s coverage of cyber charters, written by my colleagues Ben Herold and Arianna Prothero, as evidence that online education has not produced the desired academic results compared to traditional public schools.

Exane also questioned the potential sustainability of the growth rate for Connections Academy, an online school provider for grades K-12 that Pearson acquired in 2011. The academy is a division of Pearson’s Connections Education, LLC, which was the subject of a  defense of cyber charters in the Education Week coverage.

The FTSE 100 tracks the 100 companies on the London Stock exchange with the largest market capitalization.

This was the second major share drop for Pearson in 2017. In January, my colleague Sean Cavanagh covered news about the company’s stock decline on projections for lower than expected profits from CEO John Fallon. Pearson’s shares had been trading at £9.99 on Jan. 17, but fell to £7.13 the following day.

The company’s shares have gained ground since then, having recovered to £8.49 by April 4. The price of the stock closed at £7.90 today on the news.

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