What Happened?
Shares of education company Lincoln Educational (NASDAQ: LINC) fell 6.8% in the morning session after investors continued to focus on several negative details within its second-quarter 2025 earnings report, which overshadowed headline revenue and profit beats. While Lincoln Educational reported strong top-line results, with revenue growing 13.2% year-over-year to $116.5 million and earnings per share of $0.05 significantly beating estimates, the market appeared to focus on a substantial increase in cash burn. The company's free cash flow, a measure of cash generated after accounting for capital expenditures, worsened to negative $29.59 million from negative $2.71 million in the same period last year. This was attributed to demanding reinvestments. Additionally, investors may have been concerned by stagnant student enrollment, which was flat year-over-year. These underlying concerns about cash usage and future growth likely outweighed the positive headline numbers.
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 quite volatile and have had 18 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 8 days ago when the stock gained 3% on the news that markets rebounded following a sharp sell-off in the previous trading session as weaker-than-expected U.S. jobs data fueled investor hopes for a potential interest rate cut by the Federal Reserve. The July Nonfarm Payrolls report revealed a gain of only 73,000 jobs, significantly below the 110,000 expected. Compounding the news, prior months' figures were revised downward by over 250,000 jobs. This data, indicating a cooling labor market, has led investors to dramatically increase bets on a September interest rate cut by the Federal Reserve, with the probability jumping to over 80% according to the CME FedWatch Tool. The prospect of lower borrowing costs typically stimulates economic activity and boosts consumer spending on non-essential goods and services, which directly benefits companies in the consumer discretionary space.
Lincoln Educational is up 25.2% since the beginning of the year, but at $19.12 per share, it is still trading 22% below its 52-week high of $24.50 from August 2025. Investors who bought $1,000 worth of Lincoln Educational’s shares 5 years ago would now be looking at an investment worth $2,854.
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