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Why Coursera Shares Plunged Today

By Billy Duberstein – Nov 3, 2021 at 4:50PM

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Despite an earnings beat, Coursera couldn't quell fears over the education-tech sector.

What happened

Shares of Coursera (COUR -0.06%) fell on Wednesday, with the stock finishing the day down 10.7%.

The plunge came on the heels of the company's third-quarter earnings report. Strangely, that report beat analyst expectations on both revenue and earnings per share. So what caused the drop? Likely, Coursera is catching a cold from an industry peer that fared much worse. 

Young man wearing headphones watches a laptop screen while sitting in a library.

Image source: Getty Images.

So what

In the third quarter, Coursera's revenue rose 33% to $82.7 million, and the adjusted net loss per share came in at $0.06. Both figures beat expectations. In the release, CEO Jeff Maggioncalda said, "Our third-quarter performance reflects the continued urgency with which companies, campuses, and governments around the world are investing in digital skills."

Coursera offers online instruction in new-economy tech skills such as data science, machine learning, and general computer science. It just went public this year in March, at $33, just above where shares are trading today. Between the IPO and today, shares had gotten as high as $65 per share.

As the pandemic appears to be easing and more people are now filling jobs instead of taking online classes, there's concern the edtech boom may be over, which is why the stock is falling. Industry peer Chegg (CHGG 2.10%) warned yesterday that higher wages and employment opportunities are luring potential students into the workforce instead of community college or regular college. Chegg's stock was cut in half yesterday as a result, and apparently Coursera's good financial results weren't enough to quell investor fears over the sector.

Now what

Investors should be aware that Coursera and Chegg have pretty different businesses, and Coursera's business may actually benefit from current trends. Chegg is a platform for high school and college learning, while Coursera's platform is used for more job-specific tech skills. Coursera's enterprise segment rose 75% last quarter, and paying enterprise customers were up 124%, showing strong growth even as the economy reopens.

In that light, those interested in the edtech space should put Coursera at the top of their watch lists; the recent dip might not be totally warranted. 

William Duberstein has no position in any of the stocks mentioned. His clients may own shares of the companies mentioned. The Motley Fool recommends Chegg. The Motley Fool has a disclosure policy.

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