American Public Education Shares Plunged: What You Need to Know


Although we don't believe in timing the market or panicking over market movements, we do like to keep an eye on big changes -- just in case they're material to our investing thesis.

What: Shares of for-profit educator American Public Education (NAS: APEI) were getting a lesson in pain from the market today, falling as much as 28% in intraday trading after the U.S. Marine Corps cut its Tuition Assistance Program funding.

So what: According to Reuters, the Marine Corps will now provide students with $175 per semester hour for undergraduate courses, down from $250 previously. This is a particularly big deal for American Public Education, which is the parent of American Military University and, as of 2010, had a student base that was 62% U.S. military. These current cuts are obviously bad news for the company, but they also raise concerns that similar cuts could be coming from other branches of the armed forces.

Now what: It's really been a rough road for for-profit education companies as many aspects of the sector's model have come under fire from regulators. With that as the backdrop, this military funding issue is a particularly tough turn for American Public Education and growth will almost certainly get dinged as a result. Possibly adding fuel to the selling fire today, short-seller Jim Chanos reportedly laid out a case against the for-profit educators, calling them a "national shame."

There may be a case to be made for sticking with American Public Education because of its strong market position, growth, and profitability, but investors will definitely want to take some time to digest what today's news means for the company's future.

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At the time thisarticle was published The Motley Fool owns shares of American Public Education. Try any of our Foolish newsletter services free for 30 days. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors.Fool contributor Matt Koppenheffer does not have a financial interest in any of the companies mentioned. You can check out what Matt is keeping an eye on by visiting his CAPS portfolio, or you can follow Matt on Twitter @KoppTheFool or Facebook. The Fool's disclosure policy prefers dividends over a sharp stick in the eye.

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