In the online world of remote learning, newly public Coursera might find itself in competition with these three digital education stocks.
Coursera (NYSE: COUR) has only been around for about a decade, but in that time it has become a leader in the remote learning space. In fact, between 2017 and 2020 its revenues doubled from $95.6 million to $293.5 million. In 2020 alone, its sales growth was up a huge 60%.
This is great news for investors as they can now buy stock positions in this company as Coursera went public on 31 March. In its IPO it sold over 15 million shares at $33 each. Want to know what an IPO is? Find out more here.
But this company has some competition to contend with if it wants to be crowned top dog in the remote learning world. So we looked at 3 companies that will certainly give Coursera a run for its newly earned money.
1. Grand Canyon Education (LOPE)
Grand Canyon Education (NASDAQ: LOPE) is essentially a technology company that provides a comprehensive list of services for colleges and universities across the U.S. This extensive list of services includes everything from internal administration and class scheduling, to counseling services and financial aid.
The company is growing at a fast rate with enrollments increasing on a yearly basis. In the last year, the number of pupils saw a 7.2% rise year-over-year (YoY) to 115,390. Indeed, its revenue is expected to grow by 9% this year and a further 7% for 2022. This is pretty impressive for a company in the education sector.
Unfortunately, the company has one major drawback, Grand Canyon Education is heavily tied to Grand Canyon University. Whilst it does receive around 60% of all the university's enrollment and tuition fees, it also does not have much diversification as 95% of all enrollments come directly from the university. Unless the company can find other education centers that will use its service, its growth is directly tied to that of Grand Canyon University.
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2. Chegg (CHGG)
Chegg (NYSE: CHGG) is definitely the most well-known on this list after a boost in popularity during the pandemic. It prevents a credible threat to Coursera in the online education market as it has only just dipped its toe in the online tutorial world. Founded in 2005 as a textbook rental company it has transformed into a digital study guide and textbook company providing its products to more than 6.6 million high school and college students. This is pretty impressive considering it has grown in an era of Amazon dominance.
For its fiscal year 2020 the company's revenue was up 57% and subscribers up 67%, this was boosted by the sudden need for digital schooling, including learning materials. For Q1 in 2021, total net revenue came in at $198.4 million, up 51% YoY. Estimates for 2021 as a whole see the company making sales totaling $789.3 million, which will be an increase of 23% YoY. This estimate is lighter than many investors wanted and unfortunately, Chegg's share price is now showcasing their lack of enthusiasm as it is currently down 12% year-to-date.
3. New Oriental Education and Technology (EDU)
New Oriental Education and Technology (NYSE: EDU) offers courses for foreign language test preparation as well as for admissions and assessments in the U.S., China, and many commonwealth countries. It mainly targets primary and secondary educational services as well as focusing on technology development in this sector.
In its most recent earnings report, New Oriental saw its quarterly student enrollments increase by 43% YoY to 2,296,800 students, whilst its total net revenue increased by 29% YoY to $1.1 billion. Indeed, it increased the number of learning centers using its services by 14% to 1,416. This can be attributed to the companies flexibility, allowing schools to easily switch to online classes when lockdowns closed all learning centers and schools.
However, many investors are worried about China aiming to impose new education regulations as part of its program of making it cheaper for parents to raise children. This could disrupt New Oriental's profit margins overall. However, historically Chinese reforms in the education sector have not had too much long-term disruption and in the end, make it a more sustainable business environment.
MyWallSt operates a full disclosure policy. MyWallSt staff currently hold no positions in companies mentioned above. Read our full disclosure policy here.
