What Happened?
Shares of education company Lincoln Educational (NASDAQ:LINC)
fell 15.9% in the morning session after the company reported second-quarter results in which revenue and adjusted EBITDA rose sharply, but new student start growth slowed abruptly. Investors sold the stock because new student starts rose only 1% in the second quarter, down from 19.5% growth in the first quarter, after fewer enrolled students showed up on the first day of class.
The headline financials were strong. Revenue grew 22.4% to $142.6 million, and adjusted EBITDA increased 42.4% to $12.7 million, so the selloff was not about a collapse in current-period profit. The pressure came from the enrollment funnel. Ending student population still rose 10.4%, which supports near-term tuition revenue, but starts are the forward indicator for whether that population keeps expanding.
When starts decelerate this quickly, investors often mark down the multiple even if the company is still growing the installed student base.
Lincoln reiterated full-year guidance, which means management is not formally cutting the outlook after the slower start quarter. That reassurance was not enough to offset the signal from first-day show rates. In education names, Wall Street tends to treat sudden start deceleration as a leading risk to later revenue, especially when the miss is tied to students who enrolled but did not attend. Until start growth reaccelerates, the market is likely to stay focused on enrollment quality rather than the quarterly revenue beat.
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Lincoln Educational? Access our full analysis report here, it’s free.
What Is The Market Telling Us
Lincoln Educational’s shares are very volatile and have had 20 moves greater than 5% over the last year. But moves this big are rare even for Lincoln Educational and indicate this news significantly impacted the market’s perception of the business.
The biggest move we wrote about over the last year was 9 months ago when the stock gained 12% on the news that the stock's positive momentum continued as the company reported strong third-quarter financial results that surpassed analyst expectations and raised its full-year guidance. Revenue for the quarter grew by 23.6% year-on-year to $141.4 million, beating Wall Street estimates.
This growth was driven by a nearly 15% increase in the student population. The company's earnings per share of $0.12 also significantly beat the consensus estimate of $0.02. Following the strong performance, Lincoln Educational increased its full-year 2025 financial forecast, raising its revenue guidance to a range of $505 million to $510 million and boosting its adjusted EBITDA target. The positive results and improved outlook signaled healthy demand for its programs.
Lincoln Educational is up 44.9% since the beginning of the year, but at $33.78 per share, it is still trading 39.3% below its 52-week high of $55.68 from July 2026. Investors who bought $1,000 worth of Lincoln Educational’s shares 5 years ago would now be looking at an investment worth $5,020.
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