I certainly don’t recommend mindlessly mimicking the trades of other people, even if they’re billionaires. However, one investing legend’s sizable stake in Coursera (NYSE:COUR) could prompt some folks to open a bullish position of their own in COUR stock.
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Not long ago, I strongly recommended buying Coursera as its share price had dropped to a buy zone.
Unfortunately, Coursera’s shares have flat-lined since I made that bullish call. Still, that means that it’s still possible to start a new position or add to an existing one at a favorable price point.
Despite the disappointing short-term price action, my bull thesis on Coursera remains as strong as ever. And of course, having an investing “whale” i.e. George Soros, on my side doesn’t hurt.
A Closer Look at COUR Stock
I’ll admit that COUR stock does not have a great deal of trading history. After all, its shares only started trading on the New York Stock Exchange on March 31.
Here’s what we know so far. First of all, the stock was originally expected to be priced between $30 and $33, and Coursera ended up setting the offering price at $33.
As it turned out, COUR stock actually first became available to the public at $39. On its first day of public trading, the stock climbed 36% to $45.
The hype phase continued for a few more days, with the stock reaching a 52-week high of $62.53 on April 7.
Unfortunately, the shares then declined as investors’ enthusiasm wore off. By May 28, after two weeks of flat price movement, COUR stock had declined to $38.
Does this mean that Coursera is in trouble? Not necessarily – and at least one big-money investor is risking his capital on this fascinating digital education company.
A Legend Takes a Stake
Holocaust survivor and Soros Fund Management founder George Soros has undoubtedly earned his stellar investing reputation and his considerable fortune.
If you can believe it, in the 50 years that ended in 2020, Soros Fund Management generated an “average annualized return of 33%,” according to TipRanks. It’s been said that this makes Soros’ firm the most successful hedge fund in history.
Among his greatest successes was when Soros boldly took a leveraged short position against the British pound sterling in 1992. When that currency dropped in relative value, Soros “made $1 billion in a single day,” TipRanks noted.
I don’t expect Soros to make that kind of money with his position in Coursera, by any means. Nevertheless, it speaks volumes that he’s willing to wager on a company that’s only been around for nine years.
Reportedly, Soros’ fund purchased 105,000 shares of Coursera. I wasn’t able to determine his exact reason for buying the shares.
A Vast Addressable Market
Still, it’s fair to say that Soros takes the education sector seriously. In fact, he recently pledged a $500 million endowment to Bard College, which is a private liberal arts college in New York.
But although Soros is a philanthropist, he wouldn’t invest in COUR stock unless he saw the potential to profit from it.
And apparently, Soros isn’t the only one who’s leaning bullish on Coursera and on the education market in general.
Needham analyst Ryan MacDonald has a “buy” rating on Coursera’s shares, along with an ambitious price target of $56.
In defense of this outlook, MacDonald cites “the increasing role of automation, the widening skills gap, and the shift to online learning.”
Moreover, the analyst estimates that Coursera is operating within a total addressable market valued between $47 billion and $50.6 billion.
Consequently, we can speculate that Soros is seeking a growth-oriented stake in a market that’s large and lucrative.
The Bottom Line
While we can’t read Soros’ mind, we can at least track his investments and consider his possible reasons for making them.
And in the case of Coursera, it’s evident that Soros believes strongly in education – and in the profit potential of a vast online education market.
On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.
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