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Update on EdTech Market Valuations
Other than a few companies, the stock market continues to punish EdTech firms
Phil Hill
August 11, 2023
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Several of our recent posts has indirectly touched on market valuations for EdTech firms.
A Preliminary Look at US OPM Deal Growth Over Time on the downward trend of new OPM programs in the past several years
D2L Fusion 23 Conference Notes on that company’s continued improvement in the market but risky strategy with Creator+
Why Pearson is Complicit on its moves to knowingly push off brutal layoffs for their OPM unit to the new owners, which occurred two days after Pearson’s half-year earnings report
InstructureCon 23 Conference Notes describing its strong financial performance alongside disappointing product demonstrations
As you well know, this is not a financial analysis newsletter. However, the size and scope of the market downturn for EdTech is relevant for vendor strategy and for the financial health of publicly-traded companies. This means that it is a good time to update our summary of market valuations, last updated in December.
The approach I’ve taken is to compare the market valuations to the date of Coursera’s Initial Public Offering (IPO) in late March 2021, as that date best captures the previous peak of exuberance. This is not the same as the peak valuation for all companies, as 2U’s maximum occurred in May 2018, but it does capture an overall market moment of comparison.
Keypath, Instructure, and D2L had their IPOs after Coursera, in June, July, and November 2021 respectively. I used the IPO valuation as the comparison point for those three.
If you look at stock prices as of Wednesday of this week, you can see overall performance from March 2021 to August 2023. Only Instructure (29%), Pearson (14%), and PowerSchool (9%) have increased in this time period.