Udemy (UDMY) Stock Trades Down, Here Is Why
Max Juang /
August 1, 2024
What Happened:
Shares of online learning platform Udemy (NASDAQ:UDMY) fell 22.9% in the morning session after the company reported second-quarter earnings results. Udemy not only lowered its full-year revenue guidance but also missed Wall Street's EPS estimates. Sales were impacted by FX headwinds and a decline in consumer revenue. Also, there were challenges with upsells, which took longer than historical trends, and pressured the reported retention rate. Overall, this was a bad quarter for Udemy.
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What is the market telling us:
Udemy's shares are very volatile and over the last year have had 9 moves greater than 5%. But moves this big are very rare even for Udemy and that is indicating to us that this news had a significant impact on the market's perception of the business.
The biggest move we wrote about over the last year was 6 months ago, when the stock dropped 22.1% on the news that the company reported first-quarter results with ARR (annual recurring revenue) falling below expectations, though revenue beat by a narrow margin. Adding to the negatives was guidance. The company's full-year revenue and adjusted EBITDA margin guidance both missed analysts' expectations. Next quarter's revenue guidance followed the pattern and came in below Wall Street's estimates. Overall, this was a mediocre quarter for Udemy, and the guidance is sure to weigh on shares.
Udemy is down 46.4% since the beginning of the year, and at $7.47 per share it is trading 53.2% below its 52-week high of $15.96 from December 2023. Investors who bought $1,000 worth of Udemy's shares at the IPO in October 2021 would now be looking at an investment worth $271.64.
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