Today saw Coursera's share price plummeting to its lowest point ever.
Coursera's share price took a dive on Tuesday, dipping to all-time lows in the early trading hours, despite the online education company posting a 15% revenue growth in Q1 2024. The stock managed to bounce back a bit, but was still down around 12% by midday ET.
Where's the AI magic?
Coursera's financial report for the first quarter was anything but terrible. Revenue clocked in at $169 million, a noteworthy 15% increase year-on-year. The company's gross margin also improved to 53%, compared to 52% in the previous year. Meanwhile, cash from operations skyrocketed to $24.5 million.
But analysts were left feeling underwhelmed, as Coursera's numbers didn't quite live up to expectations. For starters, the company's Q1 revenue fell right at the lower end of its guidance. Plus, management slashed revenue expectations for 2024, predicting no better than $705 million, down from its previous range of $705 million to $730 million.
There had been high hopes for Coursera's AI courses to drive impressive results this year. However, the lowered guidance suggests the AI boost might not be as substantial as predicted.
So, what now?
Deciding what to do with Coursera stock isn't easy right now. On the one hand, Q1 saw some decent numbers, making the stock price drop seem excessive. On the other hand, the company's reduced full-year revenue forecast implies a mere 10% year-on-year growth. With the stock trading around 2.5 times its trailing sales, it doesn't appear overpriced, but no great bargain either.
Online education is known for its challenges, and AI education isn't living up to expectations either. Coursera has some strong partnerships and potential, but investors might want to adopt a watch-and-wait approach before believing in the company's ability to drive faster growth.
Enrichment insights:
- Coursera's Q1 performance, while not terrible, didn't meet analysts' expectations, leading to a negative market perception.
- Operational challenges, such as profitability and maintaining costs, remain a concern for the company.
- Subscription renewal issues have led to a 10% workforce reduction and affected Coursera's financial performance.
- The appointment of a new CEO, while seen as a positive move, may take time to show its impact.
Despite Coursera's 15% revenue growth in Q1 2024 and promising financial reports, the company's stock saw significant losses due to investor expectations not being met. In light of this, analyzing potential investment opportunities in the field of finance, especially in companies involved in online and AI education, requires careful consideration and a long-term perspective.