Why Coursera Stock Plummeted Today
Key Points
Coursera stock sank today despite reporting stronger-than-expected Q3 results.
The education-services specialist raised its full-year sales guidance in response to last quarter's strong results and continued momentum.
Investors still sold out of Coursera stock today in response to the company's adjusted EBITDA guidance coming in below expectations.
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Coursera (NYSE: COUR) stock saw big sell-offs in Friday's trading despite a bullish backdrop for the broader market. The education-services company's share price fell 12.9% in a daily session that saw the S&P 500 (SNPINDEX: ^GSPC) rise 0.8% and the Nasdaq Composite (NASDAQINDEX: ^IXIC) jump 1.1%.
Coursera published its third-quarter results after the market closed yesterday, and actually posted better-than-expected sales and earnings for the period. The company also raised its full-year sales guidance, but that wasn't enough to stop a significant valuation contraction for the company.
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Coursera sinks despite quarterly beats
After the market closed yesterday, Coursera published results for this year's third quarter. The company notched non-GAAP (generally accepted accounting principles) adjusted earnings per share of $0.10 on sales of $194.2 million -- beating the average Wall Street analyst estimate for per-share earnings of $0.08 on sales of approximately $190.3 million. Coursera's revenue increased roughly 10% year over year last quarter and caused the company to increase its full-year sales target, but investors sold the stock in response to disappointing guidance on one of the company's profitability metrics.
What's next for Coursera?
For the fourth quarter, Coursera is targeting revenue between $189 million and $193 million. The target came in well ahead of Wall Street's target for sales of $187.5 million in the quarter. Management also updated the company's full-year sales guidance to between $750 million and $754 million. For comparison, Wall Street had been targeting sales of approximately $744.4 million prior to yesterday's quarterly report.
On the other hand, the company's guidance for adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) between $7 million and $10 million in Q4 fell significantly short of Wall Street's target of roughly $10.2 million. So while Coursera's sales outlook has improved, investors are concerned that revenue growth is coming with weaker margins.
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Keith Noonan has no position in any of the stocks mentioned. The Motley Fool has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy.
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