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On May 10, controversial for-profit education company Bridgepoint Education reported that it would delay its quarterly (10-Q) to the Securities and Exchange Commission. Today (May 15) the company reported it had found "a material weakness in internal control over financial reporting" in the area of accounts receivable. Financial reports for last year and the quarter ended in March could contain material misstatements. "We could be required to restate our financial results," says the company. The company's stock may be adversely affected and Bridgepoint may be "unable to maintain compliance with applicable stock exchange listing requirements," says the document.

Since May 9, Bridgepoint stock has moved from $10.50 to $11.54 today. It was up 3.31% today. It is not known if some on Wall Street are anticipating a buyout, a short squeeze, a topside management change, or some other action that would pop the stock further.

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Comments

Visduh May 15, 2013 @ 7:32 p.m.

This is just the sort of "disclosure" that comes early in a melt-down involving the auditors. After a number of years of rubber-stamping the financials constructed by management, a real CPA firm finally has to face the fact that they have been letting small stuff go. Only, now the rule bending and bogus accounting have reached the point where they cannot be ignored any longer. (Reminds me of the last days of Great American First Bank here in San Diego when Touche Ross decided that their biggest [by far] local client was failing, and the firm pulled the plug.) In other words, the bogus accounting is the 800 pound gorilla in the corner, and the auditors cannot keep ignoring him/her.

As to why the stock rose with such a disclosure is a mystery. But then, stock price movements have long been enigmatic.

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Don Bauder May 15, 2013 @ 9:43 p.m.

Visduh: By the time that happened, the firm was named Deloitte & Touche as a result of a merger. But Deloitte & Touche did its job auditing Great American. Touche Ross, one of the predecessors, was the one that let U.S. Financial get away with murder, as I recall. But again -- going by memory -- it was Deloitte that effectively blew the whistle on C. Arnholt Smith. Best, Don Bauder

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Don Bauder May 16, 2013 @ 8 a.m.

BRIDGEPOINT STOCK STILL RISING SHARPLY: As of this morning (May 16), a day after the revelations in the company's SEC filing, the stock is up another 1.95% to $11.77. Following this company's stock has always been fascinating, because of the perpetually heavy short position. But this doesn't appear to be a short squeeze. Quite interesting. Best, Don Bauder

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Don Bauder May 16, 2013 @ 11:38 a.m.

SOMEBODY IS BUYING, OR SHORTS ARE COVERING. With an hour and a half left of trading today (May 16), Bridgepoint stock is up almost 5%. Best, Don Bauder

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Don Bauder May 17, 2013 @ 10:36 a.m.

THE WHOLE FOR-PROFIT INDUSTRY MOVING UP: Bridgepoint is up another 4.61% to $12.62 this morning, continuing its recent run, which has been somewhat puzzling, given its revelation May 10 that it has determined its internal financial controls are weak, and that could force a restatement of earnings which could affect the stock price. It appears that Bridgepoint has been moving up in lockstep with other for-profit university stocks.

For example, Corinthian Colleges is up 15.33% this morning to $2.79. On May 9, it was $1.92. Apollo Group (Phoenix University) is up 1.35% today to $21.34, up from $18.42 on May 9. Grand Canyon is up 2.25% today, to $32.18. It was $29.68 on May 9. Best, Don Bauder

Why the for-profits universities, which have been reporting weak enrollments and prospects, are running up is not clear. Perhaps there is a rumor of coming pusillanimous regulation from Washington.

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