As much as we want to return everything to its place and live the way we lived before the pandemic, it is already difficult to implement this. The coronavirus has made adjustments to our lives, and the business that flourished during the pandemic continues to expand as such services continue to be in demand.
Zoom Video Communications
The most prominent beneficiary of the quarantine was the company Zoom Video Communications, Inc. (NASDAQ: ZM)providing a service for group communication using video chat.
Through Zoom, they began to conduct online learning in schools, colleges, universities and other educational institutions. This service was also in demand in the business environment: meetings of shareholders, daily planning meetings with employees working remotely, meetings, and so on. During the pandemic, everyone went online, and the Zoom service turned out to be the most popular among its peers.
Against this background, the company’s shares rose in price from 60 to 590 USD in less than a year.
Online education is in demand
During the pandemic, there has also been a sharp rise in revenues for companies providing online learning services.
As the Internet coverage expanded around the world, so did the number of students enrolled in online schools. And whether the crisis hit or not, the online education market would continue to grow. However, its growth rate has increased significantly due to the introduction of quarantines in many countries.
In general, according to the forecasts of experts, the online education market is expected to grow by more than 8% per year from 2020 to 2025 and will reach 375 billion USD.
USA is the leader in the online education market
The leader in this market is the United States with a 41% share. This is due to a well-established infrastructure, highly qualified personnel and an increased demand for services from corporate clients.
According to analytical sites, more than 90% of the US population has access to the Internet, which means that it is the most favorable environment for business development in the field of online education. Based on these figures, one should look for companies for investment in this particular country.
The leader in terms of capitalization in the US online education market is the company Coursera, Inc. (NYSE: COUR)…
Coursera is an American company that provides a platform for delivering online courses. Founded in 2012 by Stanford University Computer Science Professors Andrew Yan-Tak Ng and Daphne Koller…
Coursera partners with 150 universities and offers more than 4,000 courses, including degree programs at prices significantly lower than full-time studies.
The company focuses its efforts on developing training programs that enable students to get high-paying jobs. To achieve these goals, Coursera has partnered with companies such as Amazon (NASADAQ: AMZN), IBM (NYSE: IBM) and Alphabet (NASDAQ: GOOG)…
Financial performance of Coursera
The pandemic had a positive impact on the company’s revenue growth: in 2020, it increased by 59%. However, losses also increased. This was due to the infrastructure costs required to meet the skyrocketing demand for Coursera’s services.
The results of the first quarter of 2021 show that revenue continues to grow at a rapid pace. During this period, it increased by 64% compared to the same quarter last year and reached USD 88.4 million. Coursera’s management predicts that revenues will continue to grow in the second quarter and could reach $ 93 million.
The company went public in March 2021. Trading in shares began at 39 USD per share. The IPO was more than successful, for 5 days the shares rose in price by 60%, but then the excitement subsided, and the price of securities began to gradually fall.
Coursera shares can now be purchased at USD 37 per share. Bank analysts UBS Morgan Stanley and Goldman sachs indicate an undervalued stock. According to their forecasts, the securities should be traded at 55 USD, which is a 48% discount to current quotes.
The next company to look out for is Stride, Inc. (NYSE: LRN)…
Stride, Inc. Is a for-profit education company that provides online education designed as an alternative to traditional face-to-face education.
The company is a leading provider of K-12 education programs to students, schools and districts, including vocational training services for middle and high school curricula. For adults, Stride offers training in the professional skills needed to work for Fortune500 companies.
Stride was founded in 2000 by a former banker Ronald J. Packard… In the early stages of the company, a former US Secretary of Education was invited to develop the company. William Bennett as chairman of the board of directors. But by now, the entire management of the company has changed, and its founder left his post in 2014 and created a new firm providing services in the field of education.
Financial performance of Stride
The pandemic has had a positive impact on Stride’s earnings. The company’s revenue in the first quarter increased by 52% compared to the same period last year and reached USD 392 million. Income from operating activities amounted to USD 38.6 million, which is 165% more than a year earlier.
The number of students enrolled in the first quarter was 155 thousand. In the same period last year, 108 thousand people were enrolled.
Stride management predicts further revenue growth. In the second quarter, the company’s revenue is expected to reach USD 385 million, which is an increase of more than 40%.
Stride shares are trading far from all-time highs, but the company’s earnings are at record levels and growing.
In this situation, we can talk about a significant growth potential of the value of securities. Now the shares are trading at a price of about 30 USD, historical highs are at 52 USD per share, which implies an 85% increase in the price.
American Public Education
Another company worth looking at is American Public Education (NASDAQ: APEI)…
American Public Education, Inc. provides an online post-secondary education service. The main direction is to meet the training needs of military and civil servants. The American Public curriculum includes 87 degree programs and 69 certificate programs in disciplines ranging from national security to the humanities. The company’s courses are attended by about 127,000 students from all over the world.
The results of the first quarter show that the revenue of American Public Education in comparison with the same period last year increased by 18.7% and amounted to USD 88.5 million. Net income increased from 0.16 to 0.49 USD per share. There is also a 45% increase in the number of new students.
Management fears falling income
The company’s earnings are approaching record levels, but shares fell 21% after the release of the report. The fact is that the management of the American Public fears a drop in revenues in the second quarter.
The reason is banal. Several US Army websites were being updated, and the GoArmyEd portal, through which about 25% of all students enrolled in American Public, were registered, was shut down on February 11. On March 8, a new portal ArmyIgniteED was launched to replace it, but after a few hours access to it was closed for technical reasons.
Members of the active army are the largest group of students in the company. Ongoing problems with the activation of the ArmyIgniteED portal resulted in a sharp drop in registrations in April, the first month of the second quarter. Consequently, there is a high probability that income growth could slow down.
However, it should be noted that even taking into account the force majeure that has arisen, the company’s revenue is expected to reach USD 89.9 million, which is 9% more than in the second quarter of last year.
Since the negative event is temporary in nature, the current share price can be considered as attractive for investment. The chart shows how investors buy American Public shares when the price drops to 26 USD. At this level, the price of securities begins to rise sharply.
Experts point to quotes over 40 USD as a target price, which is a 42% discount to current quotes.
The pandemic has had a positive impact on the online education market and accelerated its development. Vaccinations and the removal of travel restrictions will no longer be able to stop the growth of this market. Consequently, companies operating in this sector will continue to increase their income, which means that the value of their shares will grow.
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