Shares of online education provider 2U (TWOU) - Get Report cratered on Wednesday after the company reported second-quarter results far below analysts' forecasts and indicated it expects a significantly wider full-year loss as it adjusts its business model to staunch a decline in enrollments.

Shares of 2U plunged 66%, or $24, to $12.45 on the Nasdaq Stock Market after the Lanham, Md.-based company reported a net loss of $28 million, or 46 cents a share, vs. a loss of $18.3 million, or 33 cents a share, in the comparable year-ago quarter. 

Analysts polled by FactSet had been expecting a loss of 35 cents a share.

The company also provided updated guidance, stating it now expects to lose between $70.9 million and $76.9 million for the full year, or between $1.16 and $1.25 a share, substantially below the current FactSet consensus estimate of a loss of 32 cents.

2U CEO Christopher Paucek told analysts and investors on a post-earnings conference call that the company is feeling the effects of a more competitive online education market, where more universities are offering courses and diplomas online.

"The online education market is evolving. Secular forces are pushing more schools online. Indeed, it's becoming obvious that all schools are going online. We're calling it the mainstreaming of online education. 

"We believe this represents a new reality in the marketplace and requires us and others to adjust to it," the CEO said.

"This is clearly a breaking of the company's model and we expect shares to be under material near-term pressure as the company readjusts for a more competitive world," Macquarie analysts wrote in a note to clients on Wednesday following the earnings release. The firm downgraded 2U to neutral from outperform.

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