Go Public, Get Schooled

Let this be a lesson to all you Grand Canyon University online students: Giddy springtime graduations don't always lead to a flurry of job interviews in the fall.

It paid the price. When it filed to go public in May, Grand Canyon was hoping to raise as much as $200 million at $20 a share. A few price revisions later, the dot-com educator had to settle for a 10.5 million share offering at $12 a stub.

This doesn't mean that this is the end of Grand Canyon's problems. Web hosting giant Rackspace (NYSE: RAX) is the last stateside company to go public. It too had to shave its IPO pricing, ultimately settling for $12.50 a share in August. IPO investors who thought they were getting a bargain are smarting today, with the stock trading at less than half of its IPO price.

Grand Canyon is off to a bad start, kicking off its publicly traded life by opening at just $10 a share. A hot IPO it's not.

It's a shame, because the company has the pedigree papers to go public. It is profitable and growing quickly.

All figures in millions.
*2008 is first nine months only.

Grand Canyon is also toiling in a niche that is suited for this unsure economy. Layoffs call for a retooled workforce. A competitive hiring scene is advantageous to those acquiring specialized degrees.

The for-profit educators aren't trading at their 52-week lows like many other consumer-facing sectors. Apollo Group (Nasdaq: APOL), DeVry (NYSE: DV), and Corinthian Colleges (Nasdaq: COCO) are actually trading closer to their 52-week highs than their lows.

With 43.7 million shares outstanding, few will make the argument that Grand Canyon's soft opening makes it cheap on a trailing earnings basis. However, the company's promising growth trajectory and relevant niche are too juicy to ignore.

Brush up on Grand Canyon, scholars, even if "pomp and circumstance" feels more like "dump and septic tanks" this morning.

Copyright © 2008 Universal Press Syndicate.