Duolingo And Coursera Shares Dip As Analyst Warns Of Generative AI Disruption In EdTech
Shares of online education technology companies Duolingo Inc (NASDAQ:DUOL) and Coursera Inc (NYSE:COUR) are trading lower after Goldman Sachs analyst Eric Sheridan downgraded the stocks.
While the analyst expects the education sector to benefit from new generative AI technologies over the long term, he sees the key risk being learners shifting away from traditional education technology offerings, with students being able to access all content in one place for free.
The company sees homework services, language learning, and virtual tutoring as the most exposed to competitive product risk in the education technology sector.
Consequently, the analyst lowered the rating on Duolingo from Neutral to Sell and maintained a price target of $160.
Sheridan lowered the company’s FY25 adj. EBITDA margin estimate to 23.6% (from 23.9%) due to higher sales & marketing costs owing to strong competition, with a major tech firm recently announcing that it would allow language learners to practice speaking on Search.
In 2024, the analyst writes that investor will focus on the forward user & subscriber course and the potential range of Y/Y growth rates outcome; high competition; execution across newer verticals (such as Math and Music); and margin expansion and efficiency gains related to AI usage and marketing investments.
Also, Sheridan downgraded Coursera from Neutral to Sell and lowered the price target from $18 to $14.
The analyst modestly reduced revenue estimates, citing weaker enterprise revenues …
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