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Investors slam the book shut on education stocks

October 17, 2012: 12:56 PM ET

It's not a good day to be a Phoenix -- the slogan used by Apollo Group's University of Phoenix.

Late Tuesday, Apollo (APOL), the biggest for-profit education provider, reported revenue that fell short of forecasts as enrollment at the University of Phoenix shrank. And the company also cut its guidance.

To make matters even worse, University of Phoenix said Wednesday that it plans to close 115 locations and 25 campuses. That will impact about 4%, or 13,000, of students enrolled in degree programs. 

Shares of Apollo plunged 19%, dragging other education stocks down. Strayer Education (STRA), ITT Education Services (ESI), Corinthian Colleges (COCO), Capella Education (CPLA) and DeVry (DV) skidded between 4% and 7% lower.

And it's clearly a sector not loved by StockTwits traders.

PAAResearch: Simple observation: Until schools in #forprotifedu legitimately address brand and price, mkt share losses will continue $APOL $DV $STRA $ESI

ldrogen: Love seeing the disaster in $APOL and other for profit edu names, just an evil industry, absolutely evil

ProfJ: @ldrogen $APOL Totally agree. Maybe the growth of free on-line courses from top universities will help push these guys into oblivion.

Perhaps free courses will keep pressure on these companies but maybe they just need to retool. Not everything for-profit is evil.

PAAResearch:This $APOL call is a joke. If mgmt really wasn't surprised by any of this, why did they pay $41/share to buyback $800MM in stock this yr?

That's a fair point. It can't have come as a big surprise that enrollment was flagging. Of course, there are ebbs and flows in every industry so maybe this is just the storm before the calm.

TraceyRyniec: Could Apollo's continued enrollment decline indicate that people are getting jobs?$APOL to close 25 campuses and 90 centers.

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Catherine Tymkiw
Catherine Tymkiw
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Catherine Tymkiw is a news editor at CNNMoney where she helps oversee breaking news coverage and futures planning. Previously, she was the investing editor. Prior to joining CNNMoney, she was the online editor at Crain's New York Business and has nearly two decades of reporting and editing experience. She tweets @ctymkiwcnn

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