Education is a core pillar of a vibrant society, and the industry continues to evolve. Technology has made educational resources more accessible for many people. It’s possible to access a library of online information, complete college degrees online and attend live classes.
Any industry with rising demand and a pathway for innovation can reward investors who get in early. Even some of the most established EdTech stocks offer many opportunities. Investors looking to profit from tech in education may want to load up on these three stocks.
Coursera (NYSE:COUR) partners with colleges, universities and companies to offer educational resources. The company makes money through a monthly subscription. The company also receives a percentage of every tuition payment made through the platform.
Coursera has had a rocky start since its IPO and is down by almost 60% from its all-time high. However, a company that disappoints shortly after its IPO isn’t necessarily a bad investment. Shares have catapulted 60% year-to-date resulting in a $3 billion market cap.
Coursera achieved 21% year-over-year revenue growth and minimized its net losses in the third quarter. A notable trend investors should monitor is the decline of college enrollments which had been going on before the pandemic.
It’s easy to see why enrollments are down. Students get straddled into high debt, and a degree doesn’t offer the same guarantees as it did in the past. Coursera makes the path to a career more affordable.
The platform also features European universities which have lower tuition fees than their American counterparts. Some companies even accept certifications that demonstrate expertise in a certain subject. Coursera should benefit as more people turn away from universities.
Even with innovation in the education industry, students and teachers often go back to popular resources. When most people have questions, they go to Google to find the answer. Google is one of the many companies under the Alphabet (NASDAQ:GOOG, NASDAQ:GOOGL) umbrella. The company also owns YouTube.
These two search engine juggernauts command plenty of attention. Google receives a mind-boggling 89.3 billion visits per month, and that doesn’t include YouTube. That type of reach allows Google to run ads and command high asking prices.
Alphabet isn’t only making money with advertising. The company also uses Google Cloud to power many websites. Its suite of online products like Gmail and Google Docs are popular resources for students and teachers.
Alphabet has become a critical player in education technology. The company continues to innovate and generate healthy profit margins for investors. Shares have gained 58% year-to-date and are up by 173% over the past five years.
Duolingo (NASDAQ:DUOL) is a mobile app and website that helps people learn new languages. It’s the go-to app for the immersive experience it provides. Students are required to write and speak in the language they want to learn.
Duolingo has over 83 million monthly active users which grew by 47% year-over-year. Daily active users jumped by 63% year-over-year to 24.2 million. The high user growth led to an impressive 43% year-over-year revenue growth rate.
Duolingo makes most of its revenue from subscriptions. The company also makes some money from advertising, English tests and a category labeled as “Other.” This all-encompassing component primarily consists of in-app sales of virtual goods. Total bookings were up by 49% year-over-year which implies a strong finish to the year.
Duolingo is poised to accelerate its revenue growth rates with the recent addition of music and math to its flagship app. Music and math expand Duolingo’s addressable market and can increase the app’s average revenue per user.