The Market Fall of EdTech Will Have Non-Financial Impacts
Two weeks ago I posted a Twitter thread noting just how much publicly-traded EdTech stocks have fallen since last Spring, using Coursera’s March 31, 2021 IPO as a comparison date. My main point was that this situation will have impacts beyond company and investor finances.
Derek Newton expanded on this thread at Forbes with yesterday’s “It’s Been A ‘Brutal’ Year for Public Education Companies”. I have updated the chart used in the Twitter thread and in Forbes to make it more readable and to include the past two weeks’ data.
Note that only Pearson has had any positive return since the Coursera IPO date, with the other EdTech companies dropping from 17% to 83% in market value in just over a year. Also note that the overall market has dropped in this same time period, with the tech-heavy Nasdaq index dropping roughly 16%.
You can read Derek’s article at the link, but I’ll add the full email Q&A response below for context.
With ironic timing, just as Derek was posting on Monday, there was an article posted at Bloomberg stating that Indian EdTech behemoth Byju’s is in talks to acquire either Chegg or 2U.
This is the type of news that I’m expecting to see more of in the coming year or two. Companies with real money see an opportunity to acquire financially weaker EdTech firms for bargain basement prices. Besides strategic acquisitions (think Byju’s if one of those deals go through), there will also be a likely increase in acquisitions by Private Equity firms (think Anthology buying Blackboard last year, but realize that it was really Veritas Capital making the acquisition and combining the companies).
The other, related news that I’m expecting to see is an increase in the number of companies that just can’t make it and go out of business or get sold off for parts.
The main point is to expect to see real operational impacts coming from the market decline, to the level that will impact schools.
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