EdTech Financial Market Update

Before we get into the topic of today’s post, I’d like to point out that I have resumed the creation of audio options for PhilOnEdTech blog posts. Previously I did so by creating new podcast episodes, but that proved to be too time-consuming. I am now testing out a new AI-based service from Audyo that seems to be a much better option (and Jeanette thinks it sounds like Edward Herrmann is reading for us). New blog posts will includes links to a full-page audio version of the post that includes scrolling text, followed by an embedded audio player. Hope this revival of POET Readings will improve accessibility for the site. [full-page audio link]

In May of this year I wrote a post about the public financial performance for academic EdTech companies (those working significantly in K-12 and postsecondary markets), arguing that company valuations were having an operational impact on various vendors. As we approach the end of the calendar year, it is worth updating the summary view. Using the Coursera IPO in March 2021as the baseline date, which represented an approximate peak of EdTech market exuberance, the following chart shows overall stock market changes for various EdTech publicly companies (for Instructure and D2L, their IPO dates in July and November 2021 are used as baseline dates). In a word, the overall EdTech market continues to be brutal, with a small number of exceptions.

percent change in value of select EdTech stocks from Coursera IPO in March 2021 to early December 2022

To keep this in perspective note that the overall market has dropped significantly, with the tech-heavy Nasdaq index dropping roughly 17% in this same timeframe.

  • Pearson and Instructure are the best-performing stocks since March 2021, with gains of 25% and 24%. These are also two companies who early on started cutting costs and shifting towards profitability. Read that as layoffs and streamlining.

  • Grand Canyon Education has not been successful in getting the Department of Education to classify the university as a nonprofit entity, but their stock has performed relatively well with just a 2% drop. Wiley (12%) and LTG (owner of Open LMS, the former Moodlerooms, at 19%) have also seen modest stock declines that are on par with overall Nasdaq declines.

  • The bottom group of D2L (64%), Chegg (66%), Coursera (71%), Keypath (78%), and 2U/edX (81%) have all had significant drops in stock valuations since March 2021.

  • Zovio is in its own category, as it is a dead parrot. Since the May post, the University of Arizona terminated Zovio’s OPM contract for UAGC, and Zovio then sold off the remaining parts of its business. As soon as the sale of the Fullstack Academy bootcamp is complete, Zovio will cease to exist.

While Pearson has performed better than all other academic EdTech public companies, note that its operations are also likely to change due to market conditions. In August the company announced a strategic review of its OPM business, which according to multiple sources has included seeking a buyer for that part of the company. Losing ASU, its largest OPM client, along with several others, seems to be the trigger for this review, although publicly Pearson executives have not made this claim.

At the time of the May post, India’s Byju’s was reportedly in talks to acquire either Chegg or 2U/edX, but even if those rumors were true at the time, they are essentially moot. Byju’s itself has had a financial crisis after it “reported a twentyfold jump in losses for the fiscal year ended in March 2021” began a significant restructuring and set of layoffs in an attempt to become profitable, according to Nikkei Asia.

This is not a financial analysis blog, and I typically only cover financial performance when it is likely to impact the operations of EdTech companies. This continues to be the case today and through at least the first half of 2023. Stay tuned.

Update 12/7: Added Keypath data to chart and bullet point