Shares of online learning platform Coursera (NYSE:COUR) fell 5.3% in the morning session after Goldman Sachs analyst Eric Sheridan downgraded stocks in the education technology segment, citing "artificial intelligence headwinds." He lowered Coursera's rating from Neutral to Sell and cut the price target from $18 to $14. The new price target implied a potential 20% downside from where shares traded when the downgrade was announced.
The analyst added, "There are still open-ended questions around how the edTech landscape will evolve with key questions being how the rise of generative AI may alter learner behavior and ultimately user growth for many edTech companies as well as what the balance of investments (licensing fee, compute costs) and cost savings (on the content side) will be."
The stock market overreacts to news, and big price drops can present good opportunities to buy high-quality stocks. Is now the time to buy Coursera? Access our full analysis report here, it's free.
What is the market telling us:
Coursera's shares are somewhat volatile and over the last year have had 17 moves greater than 5%. In context of that, today's move is indicating the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The biggest move we wrote about over the last year was 3 months ago, when the stock gained 18.5% on the news that the company reported third quarter results that beat analysts' revenue, EPS, adjusted EBITDA, and free cash flow estimates. Its outperformance was driven by healthy user growth in its consumer division; the company benefitted from increased demand for newly launched entry-level Professional Certificates created by Google, IBM, and Microsoft. On top of that, Coursera recently launched the first entry-level Professional Certificate from Amazon Web Services. Given the increasing importance of technology in our world and the shortage of software engineers and other technical white collar workers, these certificates could be a tailwind to growth for years to come. Overall, this quarter's results were great and shareholders should feel optimistic.
Coursera is down 9.3% since the beginning of the year, and at $17.48 per share it is trading 16.9% below its 52-week high of $21.04 from December 2023. Investors who bought $1,000 worth of Coursera's shares at the IPO in March 2021 would now be looking at an investment worth $388.84.
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