Market Mad House

In individuals, insanity is rare; but in groups, parties, nations and epochs, it is the rule. Friedrich Nietzsche

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Is Coursera Making Money?

Coursera Inc. (NYSE: COUR) is trying to cash in on massive open online courses (MOOCS) by making classes from the world’s top universities available to everybody.

I think examining Coursera and its stock is a great way to learn what value higher education has. Interestingly, Mr. Market does not think Coursera (COUR) has much value.

To explain, Mr. Market paid $45 for Coursera after its 31 March 2021 initial public offering (IPO) and $44.70 for COUR shares on 30 April 2021. Conversely, Coursera’s price rose to $58 on 7 April 2021.

Conversely, Stockrow estimates Coursera’s revenues grew by 66.83% in the quarter ending on 31 December 2020. In 2020, Coursera’s quarterly revenues rose from $49.91 million on 31 December 2019 to $83.26 million on 31 December 2020.

What is Coursera?

Coursera claims to be the largest provider of MOOCs. In particular, Coursera offers MOOCs from some of the biggest names in education, including Yale and Princeton.

Coursera (COUR) claims to offer over 5,100 courses, over 40 certificates, and over 25 university degrees through its platform. Those courses include MOOCS from Yale, the Imperial College London, Princeton, Stanford, the University of Chicago, Yeshiva University, École polytechnique, Rutgers, the University of Pennsylvania (Penn), George Washington University, Carnegie Mellon University, Caltech, Duke University, Johns Hopkins University,  the University of Edinburgh, Vanderbilt University, the University of Virginia, UC Davis, the University California Irvine, the University of California at San Diego, the University Melbourne, the Indian School of Business, Emory University, the Georgia Institute of Technology, Michigan State University, Nanjing University, Morehouse College, New York University, Northwestern University, Rice University, Penn State, Tel Aviv University, the Chinese University of Hong Kong, the State University of New York (SUNY), the University of North Carolina at Chapel Hill, Tsinghua University, the University of Arizona, the University of Rochester, the University of Zurich, and the University of Tokyo.

Thus, Coursera is trying to monetize some of the world’s top universities. Coursera also offers technical courses from some of the world’s largest corporations. Those corporations include Intel, IBM, Microsoft, Alphabet (Google), RedHat, SAS, Salesforce, and Vmware.

In addition, Coursera offers courses from some impressive non-profit organizations. Those organizations include the Linux Foundation, the Museum of Modern Art, the National Geographic Society, the New York Institute of Finance, Goodwill, and the World Bank Group.

How Much Money Does Coursera Make?

Coursera (COUR) makes money. The company reported a $43.50 million quarterly gross profit on 31 December 2020.

However, Coursera reported a -$26.72 million common net loss on the same day. Since Coursera is a recent IPO, no quarterly income Stockrow has no quarterly income numbers for it.

No cash flow numbers are available for Coursera because it just went public. However, Coursera had $285.28 million in cash and short-term investments on 31 December 2020. In addition, Coursera had $417.62 million in total assets on 31 December 2020.

Coursera grew in 2020. Its Cash and Short-term investments grew from $173.58 million on 31 December 2019. Similarly, the Total Assets grew from $236.26 million on 31 December 2019.

In contrast, Coursera’s total debt grew from $0 on 31 December 2019 to $26.23 million on 31 December 2020. Thus, Coursera is a growing company with a small amount of debt.

Coursera’s Bright Future

I think demand for Coursera’s product, college degrees could be bright because college is now a necessity for the middle class.

For example, a  22 April 2021 Washington Post article claims four million US adults without college degrees who lost jobs in 2020 had not found work in February 2021. In contrast, only 199,000 adults with bachelor’s degrees who lost jobs last year were still seeking work in February 2021.

Thus, people with college degrees are more likely to have jobs in today’s economy. People with college degrees also make more money in America.

 In 2020, the Median Annual Earnings for the average American bachelor’s degree holder were $64,856, Northeastern University estimates. In contrast, the 2020 Median Annual Earnings for an American with a high school diploma were $38,792.

Why Americans Want College Degrees

Similarly, the Median Annual Earnings for a person with some college but no degree were $43,316. Similarly, the Median Annual Earnings for an American with an associate’s degrees were $46,124 in 2020.

Dramatically, the 2020 Median Annual Earnings for somebody with a Master’s Degree were $77,844. Notably, the Median Annual Earnings for an American with a Professional Degree were $96,772 in 2020. Finally, the Median Annual Earnings for an American with a Doctoral degree were $97,916 a year. Significantly, the unemployment rate for Americans with a doctoral degree was 1.1% in 2020.

The data is clear, Americans with college degrees make more money and are less prone to unemployment. Consequently, a college degree is now a requirement for middle class status in America, a country that prides itself on being a “middle-class nation.”

How Does Coursera compare?

Under those circumstances, Coursera (COUR) could make more money by giving Americans access to elite universities without the need to go back to school.

Unlike competitors such as Skillsource, Udemy, and Udacity, Coursera, offers bachelors and masters degrees from real universities. Coursera claims its degrees cost as little as $22,000 as $52,000 for on-campus degrees.

However, Coursera competes directly with those platforms by offering skill-based MasterTrack and University Certificates. Those programs include Google Data Analytics Professional Certificate, Salesforce Sales Operations Professional Certificate, and IBM Full Stack Cloud Developer Professional Certificate.

Such certificates help professionals get skills for jobs. I think there is a high demand for these certificates because of the popularity and appeal of tech jobs.

In the final analysis, I think Coursera could make enormous amounts of money because people need higher education just to achieve a middle class status in today’s world. However, I believe it will be years before Coursera makes enormous amounts of money.

If you want to invest in an education-based company, Coursera is worth investigating. I think Coursera could make enormous amounts of money from MOOCs because of today’s economy.