We came across a bullish thesis on Coursera, Inc. (COUR) on Substack by William Fleming-Daniels. In this article, we will summarize the bulls’ thesis on COUR. Coursera, Inc. (COUR)’s share was trading at $8.65 as of Jan 24th. COUR’s forward P/E was 28.49 according to Yahoo Finance.
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Coursera, Inc. (COUR), a leader in the education technology sector, is redefining learning by bridging global skill gaps and adapting to workforce demands. Despite a challenging macroeconomic environment, Coursera has balanced innovation and growth with improving financial discipline, making it a compelling long-term opportunity in the edtech space. With over 350 university and industry partners, Coursera’s offerings span courses, professional certifications, and degree programs, attracting 162 million registered learners as of Q3 2024, including seven million new additions in the most recent quarter.
Generative AI has become a cornerstone of Coursera’s growth strategy in 2024. The company has launched over 500 generative AI-focused courses, amassing over three million enrollments and positioning itself as a leader in AI education. Partnerships with industry giants like IBM, Google, and Microsoft enable tailored certifications in high-demand roles such as cybersecurity and data science. CEO Jeff Maggioncalda noted that Coursera’s innovations empower both individuals and enterprises to thrive in an AI-driven future. This focus, combined with the company’s robust enterprise and campus segments, has driven a 10% year-over-year revenue increase in enterprise partnerships, with paid enterprise customers growing 19% to 1,564 institutions globally. Partnerships, like the University of Texas System, further exemplify Coursera’s ability to expand its footprint across diverse sectors and geographies.
Coursera’s financial performance underscores its potential. The company reported $176.1 million in Q3 2024 revenue, growing 6.37% year-over-year, with full-year revenue expected at $690–$694 million. Adjusted EBITDA for 2024 is projected at $36.5–$38.5 million, reflecting a raised margin target of 5.4%. Free cash flow generation has been strong, totaling $50 million year-to-date, supported by $719 million in cash and no debt. This financial strength provides Coursera with the liquidity to invest in growth while maintaining disciplined cost management. CFO Ken Hahn emphasized the company’s efforts to align expenses with long-term profitability goals.
Despite these strengths, challenges persist. Stock-based compensation remains a notable expense, and international markets, while growing, generate lower revenue per learner. Coursera also faces competition from rivals like Udemy and edX. However, its generative AI expertise, robust partnerships, and global presence create a competitive moat.
Coursera’s valuation metrics reflect its potential upside. A forward EV/Sales multiple of 0.93 and a Price/Cash Flow TTM multiple of 15.46 suggest undervaluation compared to industry averages. As margins improve and enterprise growth accelerates, the stock’s multiple could expand significantly. Coursera’s strategic focus on AI, enterprise growth, and cost efficiency positions it for sustainable growth, offering investors a unique opportunity in the evolving edtech landscape.
Coursera, Inc. (COUR) is not on our list of the 30 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.