We came across a bullish thesis on Coursera, Inc. (COUR) on Substack by Unemployed Value Degen. In this article, we will summarize the bulls’ thesis on COUR. Coursera, Inc. (COUR)’s share was trading at $7.90 as of Nov 25th. COUR’s forward P/E was 26.04 according to Yahoo Finance.
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Coursera represents a compelling opportunity as a high-margin, low-cost platform uniquely positioned within the growing edtech space. While the company is not yet generating significant net income, it boasts over 162 million registered users, with 7 million added in the last quarter alone. This scale, coupled with positive operating cash flow over the past five quarters, has maintained Coursera’s stable cash position despite broader market pressures. Valued at just 1.62x price-to-sales—or 0.6x net of cash—Coursera’s attractive metrics are further highlighted by its ability to sustain growth even in a challenging macroeconomic environment.
Coursera’s revenue is driven by three distinct segments: consumer discretionary, vocational training, and higher education. Consumer discretionary, its largest segment, has faced headwinds due to economic challenges like higher rents and stagnant wages, growing at just 3% year over year. However, a broader rebound in discretionary spending could unlock significant growth potential. The vocational training segment, featuring microcredentials like Microsoft Excel certifications and Google Cybersecurity, grew at 10% and shows promise, particularly with the advent of AI-related credentials, which management identifies as a long-term structural tailwind. Meanwhile, higher education, Coursera’s smallest segment, is growing fastest at 15% annually, benefiting from its partnerships with over 350 universities. These partnerships, driven by institutions seeking turnkey online solutions, underscore Coursera’s unique positioning rather than competition with traditional academia.
Artificial Intelligence, seen as both a challenge and opportunity, is central to Coursera’s narrative. The company has integrated AI tools and maintains a robust $800 million war chest to make strategic acquisitions, ensuring resilience against disruptive startups. With Andrew Ng, a pioneer in AI and a founding force behind Coursera, the platform is a natural beneficiary of AI-driven workforce shifts. As millions of workers seek to retool, Coursera’s AI-focused microcredentials and professional development offerings place it at the heart of this transformation.
Despite broad skepticism toward small-cap tech, Coursera’s undervaluation is striking. Deferred revenue liabilities, overstated by Coursera’s high margins, further emphasize its financial health. A return to historical multiples, driven by revenue growth and an easing of macro pressures, could see the stock triple in value. Coupled with management’s focus on profitability, reduced stock-based compensation, and cost-cutting initiatives, Coursera is positioned not only to survive but to thrive as a key player in the evolving education and employment landscape.
Coursera, Inc. (COUR) is not on our list of the 31 Most Popular Stocks Among Hedge Funds. As per our database, 21 hedge fund portfolios held COUR at the end of the third quarter which was 27 in the previous quarter. While we acknowledge the risk and potential of COUR as an investment, our conviction lies in the belief that some AI stocks hold greater promise for delivering higher returns, and doing so within a shorter timeframe. If you are looking for an AI stock that is more promising than COUR but that trades at less than 5 times its earnings, check out our report about the cheapest AI stock.
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Disclosure: None. This article was originally published at Insider Monkey.