Coursera IPO: what you need to know

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    At $ 33 per share, this is the high end of the expected online education platform Coursera (NYSE: COUR) sprinted out the gate. As of 12:30 p.m. EST, the stock has valued at approximately $ 56, 70% above the IPO offering price. Coursera opted for a traditional IPO rather than partnering with a Special Purpose Acquisition Company (SPAC), which has been all the rage in recent years.

    Here’s what investors need to know about Coursera.

    Courera’s IPO: Why Sales Are Booming

    Coursera is an online education technology company founded by former Stanford Professors Daphne Koller and Andrew Ng. The platform offers free courses to college students, but also helps corporate customers provide training materials for professional development and other in-house training applications.

    The company uses a freemium model and offers a handful of free services in hopes of eventually converting users and organizations into paying customers. Prices may vary based on the type of educational service offered, including one-time upfront payments for shorter courses, as well as subscriptions to longer-term curricula, which may include professional certifications or specializations.

    At the end of 2020, Coursera had 2,000 corporate customers for Coursera for Business, 130 colleges and universities paying Coursera for Campus, and another 100 government organizations and agencies paying Coursera for Government. User growth has been robust: the number of registered learners rose 65% to 76.6 million in 2020.

    This contributed to similarly strong sales growth: sales rose 59% to $ 293.5 million in 2020, although high investments in research and development and marketing resulted in an operating loss of $ 66.6 million. Coursera’s net loss for the year was $ 66.8 million.

    The COVID-19 pandemic resulted in a major shift towards distance learning and working, a trend that Coursera benefited from. While some demand may fade as vaccines are distributed and the world slowly recovers, many companies will likely continue to adopt distance learning models after experiencing some of the benefits.

    Coursera bucked the dual-class trend in recent IPOs

    The net proceeds from the IPO, net of transaction fees associated with the transaction, are expected to be approximately $ 446.9 million. Certain existing shareholders who sold shares through the IPO and Coursera will not receive any of these proceeds.

    Unlike many tech companies going public these days, Coursera does not use a dual class structure to consolidate voting rights among insiders. Each share has one vote per share with no regulatory share class. The existing preferred stock class will be eliminated after the IPO and converted into common stock.

    Coursera’s public debut comes from the fact that control over for-profit colleges has increased in recent years. The company warns that wider criticism and public backlash could negatively affect how customers view Coursera and the wider industry. However, Coursera is a Certified B Corporation, a designation granted by an independent not-for-profit organization, B Lab, that commits such companies to higher standards of social and environmental performance and accountability.

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