Is Coursera a Real Ed-Tech Company?
In the future and accelerated by the pandemic, Ed-Tech companies will be some of the most profitable technology companies when AI matures. Coursera that went public this week, an off-chance (around 15-20%) of becoming one of them.
Education tech company Coursera made its market debut Wednesday on the New York Stock Exchange through an IPO and is now trading under the ticker symbol “COUR.” After hours on April 1st, 2021 it’s $47.00.
That’s far too much. The company’s stock began trading at $39 apiece, higher than Tuesday’s pricing of $33 apiece. Coursera has a long ways to go before it’s a huge sprawling AI of Education company.
Coursera priced its 15.73 million shares at $33 apiece — the high end of its initial $30 to $33 target range. In its offering, the company raised nearly $520 million at an implied $4.3 billion valuation. That’s a stretch, but Coursera is well known for producing good quality courses affiliated with Universities.
The Mountain View, California-based company, which was founded in 2012, marks the first major edtech IPO of the year, after the industry saw a boom last year alongside the COVID-19 pandemic. As schools moved to remote settings, they turned to edtech to facilitate distance learning, with venture-backed companies in the education and edtech space raising more than $12 billion in funding last year, according to Crunchbase data.
The company has only been around 9 years. Founded in 2012 by former Stanford University computer science professors Daphne Koller and Andrew Ng, the Mountain View, California-based company offers individuals access to online courses and degrees from top universities.
Gross Profit is good but it’s still not yet profitable. A real valuation for the company might be a stock of around $29.00. But such is the hype of an IPO in 2021 where there’s liquidity flowing around and high-risk leverage of hedge funds with margin calls.
In a pandemic distance world, distance learning is a thing apparently. Revenue last year jumped 59% to $293 million. Still, Coursera’s net losses widened to $66.8 million from $46.7 million in 2019 as the company said it added over 12,000 new degrees for students over the last two years. Total registered users grew 65% year over year in 2020. Honestly most students don’t learn particularly well online as remote schooling has shown in the first year of the pandemic.
Still its network of Universities is growing and an impressive array of potential courses. So as of December 31, 2020, more than 150 universities offered upwards of 4,000 courses through the Coursera platform, which features over two dozen degree programs.
However most of its users aren’t paying users. More than 90% of Coursera students pay nothing, unless they want certifications or degrees. Almost all of the content on the platform comes from third parties, including both major universities and industry partners like Google, Apple and Amazon Web Services.
Coursera is thus a Microsoft or Google acquisition target. It doesn’t have the capability to scale into an Ed-Tech company like ByteDance has and is doing. The company is also not really worth $4 Billion yet, although they claim to be, just as ByteDance is not really worth $400 Billion. When you price your shares at $33, and then they go up to $47, there’s some manipulation afoot just as Wall Street has made a lot of money on SPACs going down. The same goes for IPO hype.
You can visit their website here. Coursera is also building out Education for businesses. A bachelor’s or master’s degree completed through Coursera can range in cost from $9,000 to $45,000. The company also offers a wide variety of education certificates and professional skills courses that range in price from as low as $9.99 to $99. You would think that’s reasonable, but many future Ed-tech companies will do this better.
During the pandemic, Coursera has also partnered with more than 330 government agencies across 70 countries and 30 U.S. states and cities as part of the Coursera Workforce Recovery Initiative. Have you completed a Coursera course of late? Overall, the goal of the firm is to provide a wide range of online educational offerings to people looking to advance themselves or their career.
This is why Microsoft could acquire them because it’s all LinkedIn ever needed to be to improve its educational element for professionals.