Rosetta Stone, a provider of technology-based language-learning solutions, has been surprisingly resilient despite the global pandemic. During the first quarter, the Arlington, Virginia-based company saw a 42% increase in bookings, which surpassed its fourth quarter, which was deemed "seasonally strong." This is likely due to people using the extra time at home to learn new languages.
In January, activist investor Voss Capital disclosed a 5.3% ownership of Rosetta Stone, after acquiring 1,282,103 shares in the company.
Bloomberg reports that the company is working with financial advisors to explore strategic ideas, which may include a full or partial sale of the business. The report went as far as saying that Rosetta Stone has already started gauging interest from potential investors. Details on this possible deal were not disclosed, and the inside sources asked to remain anonymous as the situation was still developing.
Following the release of the report, shares of Rosetta Stone went up 18% to $18.87.
During a Bloomberg conference in February Travis Cocke, Voss Capital's Chief Investment Officer, said that he believed the company could be worth about $35 a share in a sale.
Since then, Voss Capital has released a letter written by Cocke to the Rosetta Stone Board of Directors, stating that the company has been "meaningly undervalued," and the solution to maximizing values for shareholders is the sale of the company. "We have appreciated your willingness to engage with us, yet at the same time, we have been disappointed by what we perceived as a lack of urgency around pursuing a true strategic review," reads the statement from Cocke. "We were encouraged to read the July 17th Bloomberg story reporting that you have retained financial advisors to explore a sale of part or all of the Company."
The statement ends by stating that "given Rosetta Stone's track record over the past few years, [Voss] feels it would be highly disappointing – and could destroy any remaining confidence shareholders have in the Board – if the decision were ultimately made to maintain the status quo."
Ultimately, for Rosetta Stone, it seems that the sale of at least some of its segments is imminent. If they choose to remain independent, Voss holds that they and other shareholders "will not hesitate to hold [them] accountable."