Coursera stock shone on its first day of listing on Wall Street, with shares in the Mountain View-based e-learning platform going 36% above their listing price of $ 33 apiece.
Through this initial public offering (IPO), Coursera successfully raised total proceeds of $ 520 million for a valuation of $ 4.3 billion, while yesterday’s hike pushed that number up to around 5, $ 9 billion.
Coursera shares have risen from the first minute they hit the trading floor, but then exploded in the middle of the day yesterday. stock trading session, ending the day at $ 45 per share while increasing 1.5% in pre-stock today to $ 45.75.
The company, an online learning platform that provides access to higher education courses from leading universities around the world, saw its revenues jump nearly 59% in 2020 compared to it a year ago after selling $ 293.5 million in courses as the pandemic prompted more people to try online education.
During this period, the number of enrolled learners – a key metric for Coursera (COUR) – jumped to 76.6 million, allowing the company to enroll in a single year nearly 40% of the students it it had brought since the launch of the platform because of this pandemic tailwind.
Meanwhile, according to Coursera SEC repository, the company also took the opportunity to attract more business customers, with this particular segment growing from 240 businesses in 2019 to 387 by the end of 2020.
The Enterprise segment has become an important component of Coursera’s revenue, now accounting for 24% of the company’s total revenue after contributing just 8% to the company’s sales in 2017.
Last year, Coursera saw its annual net loss widen to $ 66.8 million, from a previous loss of $ 46.7 million recorded in 2019.
Most of those losses were caused by higher marketing spend in 2020, as the company used the pandemic to grow its user base – a move that appears to have worked rather well.
Meanwhile, its Adjusted EBITDA, which eliminates the effect of non-recurring and non-cash items, ended the year in negative territory at $ 39 million, up from a previous negative EBITDA of $ 26 million in 2019.
Is Coursera share a buy after the IPO?
At yesterday’s closing price, Coursera is valued at around 20 times its earnings. While that number seems pretty high, it’s important to take note of the company’s historic growth and how the pandemic may have provided a long-term tailwind to the company’s business model.
In 2017, the average income per enrolled learner was approximately $ 3,092 per year, while that number rose to $ 3,442 by the end of 2020.
Meanwhile, the number of enrolled learners grew at an average rate of 24% per year before the pandemic struck. If we were to assume that growth rates would return to those pre-pandemic levels once the viral situation is over while the average income per learner remains at $ 3,442 per learner, we could predict that in 5 years, incomes de Coursera could reach around $ 860 million.
Now what about the price / sales ratio? Other companies in this space, including Grand Canyon Education (LOPE) and Pluralsight (PS), are valued at around 5-7 times their sales.
However, Coursera’s business model is quite unique, as it offers access to leading degrees from reputable universities. Therefore, if we were to assign the company a higher P / S ratio, say 10 – about twice as high as that assigned to these “competitors” – we would have a valuation of about $ 8.6 billion on the market. basis of these rough estimates.
This would represent a potential increase of 45% over the next five years if these targets and assumptions materialize.
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