Udemy stock price has crawled back in the past few weeks as investors buy the dip and reflect on the recent quarterly results. The UDMY share price was trading at $15.30, which was about 61% above the lowest level this year. Its market cap has rebounded to over $2.31 billion.
Is it safe to buy Udemy stock?
Udemy is a leading edtech company that operates one of the biggest online learning platform. It is a two-sided marketplace where learners buy or subscribe to online courses. The firm offers its products to both consumers and businesses.
Its business offerings have over 10,500 customers globally, including firms like PayPal, Box, and Eventbrite. On the other hand, the company has over 57 million customers globally and thousands of instructors.
Udemy stock price has rebounded in the past few months as investors reflect on the company’s strong earnings. In the most recent quarter, the company said that its revenue jumped by 22% YoY to $158 million, helped by strong execution and demand.
Udemy’s gross profit rose by 27% to $92 million while its total expenses rose to $109 million. It ended the previous quarter with $494 million of cash and equivalents. A key driver for the Udemy share price was the fact that the company’s business revenue of $84 million was higher than that of consumers for the first time ever. The CFO said:
“We expect Q4 revenue to be between $164 million and $167 million or 22% year-over-year growth at the midpoint driven by continued Udemy Business momentum. We expect that Udemy Business segment revenue as a percent of total revenue will further increase from Q3.”
So, is it safe to buy Udemy stock? The shares have moved sideways since February this year and they remain about 53% below the highest point in 2022. There are several reasons why the stock is a good buy. First, it operates in a large industry that is expected to show strong growth over the years.
Second, it has a strong market share in corporate education, as evidenced by its most recent earnings. Further, it offers a good risk-to-reward ratio.
Udemy stock price forecast
My last Udemy share price forecast did not work out well. At the time, I predicted that the stock would have a major bearish breakout after its Q2 earnings. Instead, the stock has staged a strong recovery and is slightly below the important resistance level at $16.42. This was a notable level which was the highest point in September, May, and January this year.
Udemy shares are slightly above the 25-day and 50-day moving averages while the Relative Strength Index (RSI) has moved above the neutral level. Therefore, the outlook for the Udemy stock price at this point is neutral. A break above the key resistance at $16.42 will be bullish and signal that bulls have prevailed.