What Happened:

Shares of online learning platform Coursera (NYSE:COUR) fell 16.3% in the pre-market session after the company reported first-quarter results, with revenue coming in slightly below expectations, driven by underperformance in the consumer segment mostly in North America. The company also called out the lower volume and conversion of paid learners. Furthermore, its full-year revenue and EBITDA guidance were meaningfully below Wall Street's expectations, resulting in a negative market reaction. Notably, the full year revenue guidance was lowered to a range of of $695 to $705 million (vs. previous guidance of $730 to $740 million). Full year adjusted EBITDA guidance was also lowered to $26m at the midpoint (compared to previous guidance of $29). 

On the other hand, Coursera beat analysts' profitability estimates this quarter (EPS, EBITDA, free cash flow). Overall, this was a mixed but weaker quarter for Coursera.

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What is the market telling us:

Coursera's shares are not very volatile than the market average and over the last year have had only 9 moves greater than 5%. Moves this big are very rare for Coursera and that is indicating to us that this news had a significant impact on the market's perception of the business. 

The biggest move we wrote about over the last year was 6 months ago, when the stock gained 18.5% on the news that the company reported third quarter results that beat analysts' revenue, EPS, adjusted EBITDA, and free cash flow estimates. Its outperformance was driven by healthy user growth in its consumer division; the company benefitted from increased demand for newly launched entry-level Professional Certificates created by Google, IBM, and Microsoft. On top of that, Coursera recently launched the first entry-level Professional Certificate from Amazon Web Services. Given the increasing importance of technology in our world and the shortage of software engineers and other technical white collar workers, these certificates could be a tailwind to growth for years to come. Overall, this quarter's results were great and shareholders should feel optimistic.

Coursera is down 45.7% since the beginning of the year, and at $10.49 per share it is trading 50.1% below its 52-week high of $21.04 from December 2023. Investors who bought $1,000 worth of Coursera's shares at the IPO in March 2021 would now be looking at an investment worth $232.89.

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