“Learn from home” stocks to ride the digital wave

Posted: 30 November 2020 1:00 pm
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Young Asian Cute girl studying with laptop at home during pandemic

10 e-learning stocks to watch as COVID-19 forces a shift towards online education.

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COVID-19 hasn't just changed the way we work – it's also changed the way we learn.

When the spread of the virus led schools and universities to shut their doors earlier this year, education providers were forced to scramble to provide online learning alternatives for students. And as the search for a vaccine continues, the continuing shift towards digital learning models could spell good news for education technology stocks.

The impact of COVID-19

Many analysts had already picked elearning as a future growth area before anyone had even heard of COVID-19. The global online education market is predicted to reach US$350 billion by 2025 – and that forecast was made before the pandemic hit. A whopping US$18.66 billion was also invested globally into education technology companies in 2019, so there were already some promising signs.

And then 2020 happened. Thanks to government lockdowns in Australia and around the world, the demand for online learning solutions increased almost overnight.

According to a report by HolonIQ, as of Q3 2020, over 770 universities in countries including the USA, UK, Australia, Canada and India had partnered with more than 200 education technology providers to help develop their online learning programs. Governments around the world are also putting serious funding into online education as universities and training centres are forced to go digital.



What does the future hold?

There's obvious potential for growth in the "learn from home" space, for a number of reasons. Not only have universities and other educational providers been forced to boost their online offerings, but coronavirus-induced job losses have resulted in an influx of out-of-work Australians looking to earn new qualifications or change careers.

Unsurprisingly, several online learning companies have enjoyed strong performances so far in 2020. Online vocational training platform iCollege has seen a share price increase of more than 130% so far this year, and is set to issue 55 million shares to raise $5.5 million to fund expansion.

Openlearning is also up over 80% for the year, while 3P Learning announced earlier this month that it had received a takeover offer from Indian education tech company Think & Learn Private. Sydney-based Cluey Learning is also generating headlines following its recent IPO and is due to launch on the ASX in early December.

There have also been some strong results on US markets, headlined by direct-to-student online learning platform Chegg. After starting the year priced at less than US$40, Chegg's price has reached highs of over US$85 throughout the year, driven in part by sizable increases to its quarterly revenues. And with online learning platform Udemy recently valued at US$3.25 billion, there are plenty of opportunities to consider in this sector.

However, it's worth noting that not only is this a highly competitive space, but there's also uncertainty about how the development of a COVID-19 vaccine will impact online learning. It remains to be seen if the shift towards online learning is a permanent one or whether old-school face-to-face methods make a resurgence once life returns to normal.

Online education stocks

To help you consider your options, we've gathered together 10 stocks in the online learning and education technology sector. We chose a mix of companies from the ASX and US markets, focusing on providers with a market cap of $30 million or more.


1. Openlearning Limited (ASX: OLL)

  • YTD performance (to 24 November): 81.25%
  • Market cap: $47.18 million
  • Date founded: 2012
  • Online learning platform offering courses from over 115 education providers
  • Recently announced a five-year agreement with the University of New South Wales Global to deliver an online program for international students


2. Cluey Learning (ASX: CLU)

  • YTD performance (to 24 November): N/A
  • Market cap: N/A
  • Date founded: 2017
  • Due to start trading on the ASX in early December
  • Offers online tutoring for kids in years 2–12
  • Raised $30 million in an IPO


3. iCollege Limited (ASX: ICT)

  • YTD performance (to 24 November): 133.33%
  • Market cap: $81.41 million
  • Date founded: 2003
  • Offers vocational training solutions in Australia and overseas
  • Planning to raise $5.5 million to boost growth in domestic market


4. Chegg Inc. (NASDAQ: CHGG)

  • YTD performance (to 23 November): 82.76%
  • Market cap: US$8.85 billion
  • Date founded: 2005
  • Direct-to-student online learning platform
  • Offers textbook rentals, homework help and more


5. K12 Inc. (NASDAQ: LRN)

  • YTD performance (to 23 November): 17.04%
  • Market cap: US$948.27 million
  • Date founded: 2000
  • US online education provider for kindergarten to year 12 students
  • Set to rebrand to Stride Inc. in mid-December


6. 2U Inc. (NASDAQ: TWOU)

  • YTD performance (to 23 November): 45.81%
  • Market cap: US$2.36 billion
  • Date founded: 2008
  • Online learning platform with courses from over 75 university partners
  • More than 150,000 students have graduated or completed courses since 2U's inception


7. Janison Education Group Limited (ASX: JAN)

  • YTD performance (to 24 November): -20%
  • Market cap: $78.99 million
  • Date founded: 1998
  • Offers online assessment and training software for businesses, governments and educators
  • Acquired UNSW Global's Educational Assessments division in 2020


8. 3P Learning Ltd (ASX: 3PL)

  • YTD performance (to 24 November): 63.53%
  • Market cap: $193.18 million
  • Date founded: 2005
  • Provides online education resources for schools and families
  • Currently the subject of a takeover offer from India's Think & Learn Private


9. Seek Limited (ASX: SEK)

  • YTD performance (to 24 November): 16.4%
  • Market cap: $9.24 billion
  • Date founded: 1997
  • Best known as an online employment marketplace
  • Also helps students choose from over 5,500 courses from TAFEs, universities and registered training organisations via the Seek Learning platform


10. Kip McGrath Education Centres Limited (ASX: KME)

  • YTD performance (to 24 November): 25.4%
  • Market cap: $82.19 million
  • Date founded: 1976
  • Over 550 tutoring centres across 20 countries
  • Also provides online tutoring services


How to buy online learning stocks

If you've researched your options and you'd like to invest in online learning stocks, you can do so using an online share trading platform. Compare brokerage fees, available markets and trader tools offered by different providers before deciding on the right platform for your needs. You can then sign up for an account, search for the shares you want to add to your portfolio and place a buy order.

It's also worth mentioning that several of the stocks on this list are traded on US stock exchanges rather than the ASX. If you want to trade any of these stocks, you'll need to choose a share trading platform that provides access to US markets.

Finally, you can also gain exposure to education technology shares by trading CFDs. CFDs allow you to speculate on the future price movements of shares, but they're a highly risky form of investment and are only suited to experienced traders.



Disclaimer: This information should not be interpreted as an endorsement of futures, stocks, ETFs, CFDs, options or any specific provider, service or offering. It should not be relied upon as investment advice or construed as providing recommendations of any kind. Futures, stocks, ETFs and options trading involves substantial risk of loss and therefore are not appropriate for all investors. Trading CFDs and forex on leverage comes with a higher risk of losing money rapidly. Past performance is not an indication of future results. Consider your own circumstances, and obtain your own advice, before making any trades.

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