Apollo Group, Inc.
Thesis
Apollo Group is priced to perfection while the outlook is far from perfect. The company must increase its enrollment by more than 70% to maintain its current valuation, which is unrealistic given increased regulatory scrutiny, competition, and rising student defaults. Additionally, the shift towards Associate degree students, who have lower graduation rates and higher default rates, poses a significant risk to the company's financial health.
Did it work?
The thesis predicted a decline in Apollo Group's stock price due to unrealistic enrollment expectations and increased risks. However, the stock has increased by 57.4% over the 208 months since the pitch, indicating that the anticipated negative factors did not materialize as expected. This significant price increase suggests that the company's performance and outlook were better than the thesis anticipated.
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