Over the past six months, Coursera’s shares (currently trading at $5.80) have posted a disappointing 5.6% loss, well below the S&P 500’s 14% gain. This might have investors contemplating their next move.
Following the drawdown, is this a buying opportunity for COUR? Find out in our full research report, it’s free.
Why Does Coursera Spark Debate?
Founded by two Stanford University computer science professors, Coursera (NYSE:COUR) is an online learning platform that offers courses, specializations, and degrees from top universities and organizations around the world.
Two Things to Like:
1. Long-Term Revenue Growth Shows Strong Momentum
A company’s long-term sales performance is one signal of its overall quality. Any business can have short-term success, but a top-tier one grows for years. Thankfully, Coursera’s 15.1% annualized revenue growth over the last three years was solid. Its growth beat the average consumer internet company and shows its offerings resonate with customers.
2. Outstanding Long-Term EPS Growth
We track the long-term change in earnings per share (EPS) because it highlights whether a company’s growth is profitable.
Coursera’s full-year EPS flipped from negative to positive over the last three years. This is a good sign and shows it’s at an inflection point.
One Reason to Be Careful:
Poor Marketing Efficiency Drains Profits
Consumer internet businesses like Coursera grow from a combination of product virality, paid advertisement, and incentives (unlike enterprise software products, which are often sold by dedicated sales teams).
It’s very expensive for Coursera to acquire new users as the company has spent 62.7% of its gross profit on sales and marketing expenses over the last year. This inefficiency indicates a highly competitive environment with little differentiation between Coursera and its peers.
Final Judgment
Coursera has huge potential even though it has some open questions. After the recent drawdown, the stock trades at 1.8× forward EV/EBITDA (or $5.80 per share). Is now the time to initiate a position? See for yourself in our full research report, it’s free.
Stocks We Like Even More Than Coursera
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