Coursera, Inc. (COUR) hit our algo-screens this morning.
With the stock up 30% and on pace for 13x its Average Daily Volume (ADV), we attach 80% odds the stock will stage a follow-through move of 10% over the next 1-2 weeks.
We see a secondary extension-move to $14-$15, thereafter, by the end of Q3.
There’s a lot to like in their Q2 print and their 2H guide…
Note the acceleration in the highlighted metrics, with Adjusted EBITDA showing a meaningful Y/Y inflection:
Coursera's revenue growth accelerated to 10%. This may not seem like much but, just as it takes a while to turn a steamship, for a company that has been going the wrong direction the last eight quarters, Management’s efforts to re-accelerate its top-line are finally working:
Importantly, as seen in the highlighted area above, we are also seeing consistent underlying leverage in their model manifest.
To wit, for 2025 on the whole, Management guided up to an 8% EBITDA Margin, +200 bps higher than previous guidance.
On the revenue line, Coursera guided up by $17M for the whole year, meaning there was a nice bump based on the expected strengthening in the business moving into the back half of the year:
While COUR has been heavily-shorted, fears that AI would decimate its business in the near-term were way overblown and have proven silly. We are still a ways off from Agentic AI.
People love interacting with other people to learn new ideas and concepts. Instead of a headwind, AI training related courses have spurred multi-year highs in new customers to its platform:
COUR has almost $800M on its balance sheet.
We think the multiple will re-rate to 2.5x forward sales. That gets us to a $2.7B market cap, or 35% higher from current levels, when you net out the $775M in cash on its balance sheet.
In the very near-term, we expect buyers to overtake sellers in COUR the next 1-2 weeks.
We see $13.50 in the next 1-2 weeks and $14-$15 by September.
The volume today is on pace to be one of its strongest days of accumulation since coming public, if not its highest ever.
The top line growth rate is not exciting enough for us to take a major position in COUR, but the sterling price & volume inflection and nice value in the shares make us want to be in it for a trade.
While just a trade, we like the odds of success here and are therefore planning to hold COUR for the next few weeks.
If, at that time, we are proven wrong and down on the trade we will exit our position.
STOP LOSS: Gap-up low of the day, $11.00 STOP.
However, we have learned to always take our algo signal for any Top Tier Reaction to a beat and raise earnings report. And that is what we are doing here with COUR.
Overall, we give this trade a Conviction Level of 8.
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Disclosure: We are long COUR stock and/or options. We may change our positioning at a moment’s notice, without notifying you of any such moves.
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