DoubleVerify Holdings Inc (DV)

[LouisDesyjr]

Lights out?

It looks like there is a possibility that DV may be wiped out. One of the recent articles mentions that up to 50,000 students since 2008 may be in line for some sort of refund or forgiveness of student loans.

FTC Sues DeVry Education Over Allegedly Deceptive Ads:
http://ih.advfn.com/p.php?pid=nmona&article=70155475

DeVry Plunges As FTC Says School Lied About How Many Of Its Students Become Waiters And Bartenders:
http://www.zerohedge.com/news/2016-01-27/devry-plunges-ftc-says-school-lied-about-how-many-its-students-become-waiters-and-ba

On equity of 1.5 billion, if the refunds average $30K or more, it will wipe out equity, plus they would probably be prohibited from the student loan program, killing revenue. If this happens, I expect the whole process will play out over the course of a year, with DV maybe not being allowed any more federal student loans as early as Summer 2016.

While it is possible that DV could survive refunds, if they are not too much, a bigger problem could be that the school gets 'cut off' from the federal student loan programs. If that happens, then I expect DV will end up bankrupt like Corinthian college in May 2015. The end for them came the prior summer when the federal government would not allow them to have any more student loans.

Corinthian Colleges Files for Chapter 11 Bankruptcy:
http://www.wsj.com/articles/corinthian-colleges-files-for-chapter-11-bankruptcy-1430746291

I am expecting there is a good chance that DV will be prohibited from participating in the federal student loan programs, starting sometime this summer, Summer 2016. If that happens, then DV will be wiped out.

Louis J. Desy Jr.


Disclosure: I own August 2016 15 puts.