Coursera stock price analysis: will this edtech giant rebound?

Coursera stock price has crashed to a near-record low as the company’s business growth decelerates amid an uptick in AI use. COUR was trading at $8.31, a few points above the record low of $6.26. 

Growth momentum easing

Coursera and other similar edtech companies like Udemy and Chegg are struggling as more customers turn to artificial intelligence tools to learn.

Udemy’s stock has crashed by over 76% from its highest point this year, while Chegg has become a penny stock. 

Coursera’s business has showed signs of slowing down. The most recent results showed that the company’s revenue rose by just 6% to $176 million in the third quarter. Analysts expect that its revenue will be $176 million in the fourth quarter. 

If these revenue estimates are accurate, its annual revenue will be $691 million, a 8.8% increase from what it made last year. 

Analysts also expect that Coursera’s revenue growth will decelerate further in the next few years. For example, its revenue will be $737 million in 2025, a 6.6% increase. On the positive side, Coursera has a long history of beating analysts’ consensus on revenue and earnings.

The case for COUR stock

A contrarian case for the Coursera stock price can be made even as its growth slows. First, its business is seeing some growth across all its segments. The most recent numbers showed that its consumer segment had a revenue of $102.3 million, a 3% YoY growth during the quarter. This division lets customers watch video lectures for free and then pay a fee for the certificates.

Coursera’s enterprise division is growing faster as its revenue rose by 10% in the quarter. This is notable growth since the division has a segment margin of 70% compared to the consumer’s 54%. 

The last smaller division, degrees, also grew by 15% to $13.4 million during the quarter. While this is a small segment, it is also the most profitable since it has a segment margin of 100%.

The other important case for Coursera is that the fear that AI will disrupt its business is highly exaggerated. While platforms like ChatGPT and Claude are great platforms, they cannot replace the solutions offered by Coursera. For one, their platforms cannot offer the degrees that Coursera offers.

Coursera also benefits from partnering with some leading companies and universities. Some of its most notable partners are the Imperial College London, Stanford, Penn University, Google, and Duke. 

Coursera also has a strong balance sheet with over $719 million in cash and equivalents and over $821 million in current assets. Its current liabilities are $314 million, bringing its working capital at over $405 million. It also has no debt, meaning that it can survive the ongoing slowdown without needing to raise additional capital.

Coursera is also on a path to profitability. Analysts expect it to earn $0.3 per share this year and $0.34 in 2024. This means that its profit margin will continue expanding in the coming years, helping to justify its valuation.

Coursera stock price analysis

COUR stock chart by TradingView

The daily chart shows that the COUR share price has been pressured and moved sideways in the past few weeks. It has formed a double-bottom chart pattern at $6.26, where it failed to move below in July and November this year. A double-bottom is one of the most bullish chart patterns in the market.

Coursera stock has moved above the 50-day and 100-day Exponential Moving Averages (EMA), which are about to form a bullish crossover. Therefore, a contrarian case for the company exist. If it works out, the next point to watch will be at $11.75, its highest point on July 26, about 42% above the current level.

The post Coursera stock price analysis: will this edtech giant rebound? appeared first on Invezz