Udemy Stock Price Has Plunged. Is it a Buy Ahead of Earnings


Udemy stock price has been in a major downward trend in the past few months as demand for technology and educational shares dwindled. UDMY shares have crashed by more than 62% from their all-time high, giving it a market cap of over $1.6 billion. 

Is Udemy a good investment? 

Udemy is a technology company in the educational sector. It operates a two-sided marketplace where instructors offer courses on all industries. In 2021, instructors in its platform made over $161 million. Customers then access these materials directly through its website and mobile applications. 

Udemy also makes money from over 10k companies that pay to educate their staff. Some of its top corporate clients are companies like Tata Consultancy, Booz Allen Hamilton, PayPal, and Box among others. 

Udemy makes money in a simple process. First, it takes a small cut for every learner who subscribes to a course. Second, the firm has a subscription package that starts at $30 per month. In total, the company has over 49 million users from around the world.

Udemy stock price has dropped sharply in the past few months as investors estimate that the company’s growth may have peaked. Indeed, the past few years have been excellent for the company as demand for online learning increased. 

Its revenue increased from over $276 million in 2019 to $429 million and $515 million in 2020 and 2021, respectively. As such, with the ongoing reopening, analysts expect that the firm’s growth will slow dramatically. 

The next catalyst for the Udemy stock price will be earnings that will come out on August 3rd. Analysts expect that its revenue dropped from $152 million in the first quarter to about $149.97 million in Q2. They also expect that its loss per share widened from 8 cents to 16 cents. 

So, is Udemy a good investment? At this stage, it is hard to recommend Udemy because of the expected slowdown considering that people are currently busy with other things. At the same time, with inflation soaring, we believe that more people and companies will postpone some extra spending. 

Udemy stock price forecast 

udemy stock price

The daily chart shows that the Udemy share price has been in a strong bearish trend in the past few months. The sell-off gained steam when the shares moved below the important support level at $16.42.

A closer look shows that the stock has formed what looks like a head and shoulders pattern whose neckline is at the important support level at $9.92.

Therefore, the stock will likely have a major bearish breakout in the near term. If this happens, the next key support level to watch will be at $8.