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Educational Development Corp.: Odious Quarterly Results Necessitate A Rethink Of Downside Risk


  • FQ3 results were indisputably terrible, in what historically has been the company’s best quarter of the year.
  • Any hope of a reinstatement of EDUC’s quarterly dividend in the near-term has likely been dashed.
  • Questions about whether investors are getting the complete picture from the company’s management in a critical KPI disclosure continue.
  • New disclosures in EDUC’s 10-Q filing reveal the extent to which the Publishing segment has been damaged.
  • If the company remains a going concern, EDUC’s equity is fairly valued at $1.00 per share in our opinion.
Screwed up dollar notes in a pile on fire


It is likely that many of our followers know that Multi-Level Marketing (“MLM”) company Educational Development Corporation (NASDAQ:EDUC) is one of our most carefully and thoroughly researched stocks. The volume of our research analyses and follow-on comments published on Seeking

This article was written by

Equity research; longs and shorts. Accounting focused.

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Comments (6)

Monocle Accounting Research profile picture
Somebody is aggressively shorting EDUC stock this week, AFTER THE BIG PLUNGE ON FRIDAY. It is not us. We do not know who it is.

Per FINRA's Daily Short Sale Volume Files (www.finra.org/...), on Monday and Tuesday, short volume in EDUC stock was a combined 22,710 shares. This is almost four times EDUC's 3/31/23 short interest of 5,913 shares.

If you are still long EDUC stock (and we cannot fathom why anybody would be), you should really consider why somebody might be doing this now, especially considering EDUC is not the most liquid stock.

If anybody has any helpful insights or information in this regard, we are all ears.

trusthouse profile picture
@Monocle Accounting Research
I don't think this is necessarily significant. After big moves, up or down, you generally see short volume increase a lot because day traders play volatility intraday with swing trades. IMO this is common. I recently saw exactly the same with JVA, with big jumps in short volume (about ten times short interest) the days it jumped suddenly at the beginning of the month, and also when it suddenly dropped a few days ago. It's not unusual with thinly traded stocks. BTW, I shorted this stock following your article, and thank for the idea!
Monocle Accounting Research profile picture
Since we published this article, EDUC stock has declined a mere 13%. We are confident that once Q4 earnings results are released in May, the stock price will collapse. We are in the process of writing a follow-up article explaining why we believe investors will finally come to terms with the rapidly deteriorating fundamental value of Educational Development Corp. in the coming months.

Monocle Accounting Research profile picture
@Monocle Accounting Research It would appear that investors / short-sellers are finally coming to terms with what we have known for a long time now. EDUC stock was down 23% today and 29% for the week.

EDUC's stock is now down 82% since the day, less than two years ago, that the company announced Craig White was being promoted to Chief Executive Officer and President, taking over from his Dad. Since then, the value of his Dad's ownership position in EDUC has declined from over $16 million to under $3 million.
@Monocle Accounting Research MAR, I bought a teaser amount about two months ago. My reason to buy was the 27,000 sales consultants reported could sell the new toys. I value the sales consultant as EDUC most valuable asset. If the numbers of consultants drop significantly, next report, I’ll be out.
Monocle Accounting Research profile picture
@enorcini We recommend that you consider a few things very carefully:

1) What are the number of PaperPie Brand Partners in EDUC's database currently (you can use our surname analysis to develop a very good estimate of this number fairly quickly);

2) How artificially inflated might the number in 1) be, considering EDUC held a "Pi Day" special on March 14 which enabled anyone to be added to its Brand Partner database for the low cost of $3.14;

3) What were the December, January, February, March and April (to-date) sales numbers for the top 50 PaperPie Brand Partners, relative to the same months in previous years. These data are publicly available;

4) Why did EDUC add Mr. Stoots (of all people) to the Board of Directors less than 2 weeks after the company and Bank of Oklahoma agreed to some fairly serious amendments to the credit agreement between the two parties; and,

5) How might the recent death of Mr. Peter Usborne impact his daughter Nicola's decision as to what to do about EDUC, especially considering: a) Mr. Craig White publicly admitted to already breaching the terms of EDUC's new distribution agreement with Usborne, thereby giving Usborne the right to terminate the agreement; and, b) new U.S. distributor HarperCollins would likely sell a lot more Usborne books if it didn't have to compete with PaperPie?

We have some fairly strong opinions regarding the above questions - opinions that are supported by extensive research. We are in the process of writing a new article now, which hopefully will be published by Seeking Alpha in the coming days.

Disagree with this article? Submit your own. To report a factual error in this article, . Your feedback matters to us!

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