Coursera (COUR) Shares Skyrocket, What You Need To Know
What Happened:
Shares of online learning platform Coursera (NYSE:COUR) jumped 18.5% in the pre-market session after 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. After the initial pop the shares cooled down to $17.41, up 1.4% from previous close.
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What is the market telling us:
Coursera's shares are somewhat volatile and over the last year have had 20 moves greater than 5%. But moves this big are very rare even for Coursera 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 three months ago, when the stock gained 11.5% on the news that the company reported a "beat and raise" quarter. Second quarter results exceeded Wall Street's revenue, adjusted EBITDA and earnings per share expectations. Notably, EPS exceeded expectations by a whopping 27%. Management attributed the strong topline growth to "differentiated value of our branded, job-relevant credentials to learners and institutions around the world." These include courses offered by top institutions such as Google and Microsoft to help learners develop skills in fields such as cloud and AI. Moving ahead, the company raised revenue and adjusted EBITDA guidance for the full year, surpassing Consensus. Similarly, revenue guidance for the next quarter also beat.
Following the results, analyst Brett Knoblauch, of Cantor Fitzgerald released a research report in which he raised the stock's rating from Neutral (Hold) to Overweight (Buy) and the target price from $13 to $17. The price target implied a potential 30% upside from where shares were traded when the report was released. Overall, it was a really good quarter with ample reasons for shareholders to remain optimistic.
Coursera is up 41.2% since the beginning of the year, and at $17.41 per share it is trading close to its 52-week high of $19 from October 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 $387.56.
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