What Happened?
Shares of online learning platform Udemy (NASDAQ: UDMY) fell 7.9% in the morning session after the company reported mixed third-quarter results, where a weak forecast for the upcoming quarter overshadowed beats on headline numbers.
While the online learning platform's revenue of $195.7 million and adjusted earnings per share of $0.13 both surpassed analyst expectations for the third quarter, sales were flat year on year. The primary driver for the negative sentiment was the company's guidance for the fourth quarter. Management projected revenue of $192.5 million at the midpoint, which was roughly 2% below Wall Street's consensus of $196.4 million and implied a potential year-on-year decline. Although the company did raise its full-year EBITDA guidance, the weak top-line outlook appeared to be the main concern for investors.
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What Is The Market Telling Us
Udemy’s shares are very volatile and have had 23 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was 20 days ago when the stock dropped 3.7% on the news that President Donald Trump threatened to impose 'massive' new tariffs on Chinese goods.
In a post on his Truth Social network, Trump stated that his administration is calculating a 'massive increase of Tariffs on Chinese products.' Trump targeted China's tightening controls on rare earth metals, which are vital components in many technology products from electric vehicles to defense systems. The threat immediately impacted the market, with the tech-heavy Nasdaq sinking 2.4% and the broader S&P 500 falling 1.7%. Such tariffs could significantly disrupt the global supply chains that many technology companies rely on for manufacturing and components. The policy uncertainty also raises fears of retaliatory measures from China, which could impact sales in a key international market for many U.S. tech firms, leading to investor concern over future profitability.
Earlier in the week, China announced new export controls on the critical minerals. Beijing's Commerce Ministry stated that foreign suppliers now need government approval to export products containing certain rare-earth materials. These materials are essential for producing high-tech goods, including computer chips, electric vehicles, and defense technology. Analysts viewed the move as a strategic assertion of China's dominance in the global rare earth supply chain, particularly amid ongoing trade tensions.
Udemy is down 30.7% since the beginning of the year, and at $5.71 per share, it is trading 43.5% below its 52-week high of $10.10 from February 2025. Investors who bought $1,000 worth of Udemy’s shares at the IPO in October 2021 would now be looking at an investment worth $207.56.
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