Barron's Is Wrong on K-12

Barron's recently had an article describing five short opportunities. Among them was K-12. The premise was that state education budgets will be cut and the impact on K-12 will be severe. I disagree.

I wouldn't risk shorting at this time. While LRN may decline with the general market pull back, the company itself is sound and in the sweetspot of education. Internet education, K thru 12, is on a huge uptrend. Ed budgets for virtual learning are being spared since they are a cost saver for school districts. Even the teachers unions aren't 100% against them as K12 uses unionized teachers in their instruction-just not as many per student load. Yes, the P/E is high, but so is their earnings growth as they have only reached profitability a few years ago. To use an overused term, their product is highly scaleable and the P/E will shrink as earnings grow. The company is worth holding long term and could see a huge pop, as it did about 2 weeks ago with a $7 move, if negative betters try to move to the door en masse.