SPECIAL REPORT The Top 7 Stocks for 2024

Back to School Bets: 3 EdTech Stocks Poised to Take Off


  • Education is undergoing a paradigm shift that benefits EdTech stocks overall.
  • Stride (LRN): Stride can replace traditional K12 learning entirely. 
  • Duolingo (DUOL): Duolingo can still move up despite its price. 
  • Udemy (UDMY): Udemy’s enterprise growth is a very positive factor overall.
EdTech Stocks - Back to School Bets: 3 EdTech Stocks Poised to Take Off

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Technology continues to change every sector, and the EdTech (education technology) sector is one that is being especially impacted with large changes occurring. That has laid the foundation for growth in EdTech stocks as traditional paradigms in education modernize with the help of IT.

Tablets and screens are rapidly replacing whiteboards and chalkboards. Individualized learning is taking the place of learning for all. It promises to increase learning overall and that creates inherent value. Thus, many pundits expect that the EdTech sector is poised for continuing growth. The research backs that notion suggesting that the market will nearly double in size by 2027. As a result, now is an opportune time to add EdTech stocks to your portfolio.

Stride (LRN)

a clipboard with the words "k-12 education" written on a yellow piece of paper and in red marker
Source: Shutterstock

Stride (NYSE:LRN) is among the many non-traditional EdTech stocks benefiting from the paradigm shift occurring across education. The company offers virtual learning services and products that run the spectrum of educational experiences. What I mean is this: Students can attend its virtual public schools which replace local on-person schooling but it also offers supplemental educational services to more traditional students.

Stride simply benefits from the secular shift occurring in education. Students and parents are increasingly demanding online, blended and lifelong learning options. The pandemic has only served to accelerate the transition further benefiting Stride and its stockholders.

That increased demand is positively affecting Stride’s business. Revenues grew by 9% in the most recent quarter while net income grew by 18.4%. Stride’s enrollment numbers are rising along with its revenue per enrollment. All of this suggests that LRN stock has a lot of room to increase moving forward, making it one to consider as secular trends are clearly in its favor.

Duolingo (DUOL) 

DUOL stock: A phone displaying the duolingo logo in front of a computer screen displaying the duolingo site
Source: dennizn / Shutterstock

Those who have ever learned a language outside of their native tongue will likely have heard of Duolingo (NASDAQ:DUOL) and its stock. It’s one of the biggest online learning platforms globally and it is undergoing tremendous growth at the same time.

As a result, DUOL shares are currently very close to being fully priced. That means there’s very little room between its target price and current price. While that logically sounds like a reason to avoid investing there’s actually a case for doing just that.

It’s very simple: Duolingo is growing very quickly which prompted the company to increase its guidance for the year. Daily average users increased by 62% in the most recent quarter, revenues were up by 44% and bookings jumped by 41% versus levels from a year ago. All of it indicates that Duolingo can move beyond price levels that have been assigned to it previously.
Beyond that, Duolingo also reached profitability this quarter whereas it posted a $15.05 million loss a year ago.

Udemy (UDMY)

An image of the logo for Udemy through a lens.
Source: II.studio / Shutterstock.com

Udemy (NASDAQ:UDMY) provides in-demand courses geared toward professional learners that make its stock worthwhile. Those courses come in a few flavors. Individuals can find courses that help to upskill and make them more marketable in the firm’s consumer segment. The enterprise segment is geared toward courses that improve employee skills in a similar fashion.

Say, for example, a sales team is lagging because it lacks the requisite skills to sell to a more nuanced B2B target customer base. A given enterprise could then find a course that satisfies those skills and purchase it to beef up its workforce. The same is true for individuals who might want to change careers, for example. There are hundreds of courses that provide skills relevant to specific industries.

It’s clearly working for Udemy. In Q2, the company passed $100 million in sales for the first time in its Udemy Business segment which is the enterprise segment I alluded to earlier. The company has fertile ground into which it can sell courses. especially in the enterprise segment.

On the date of publication, Alex Sirois did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

Article printed from InvestorPlace Media, https://investorplace.com/2023/09/back-to-school-bets-3-edtech-stocks-poised-to-take-off/.

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