What Happened?
Shares of online learning platform Udemy (NASDAQ: UDMY) fell 2.9% in the afternoon session after the major indices continued to retreat (Nasdaq -1.5%, S&P 500 -1.2%) amid profit-taking and renewed concerns about tariffs.
The market-wide downturn was driven by a weak ISM Manufacturing report and rising bond yields. Investors reacted to a federal court ruling that most of President Trump's global tariffs were illegal, raising uncertainty over trade policy and the fiscal impact of potential refunds. Rising Treasury yields added to the pressure, with the 10-year climbing above 4.2% and the 30-year nearing 5%, intensifying worries about stretched equity valuations. September's historically weak track record for stocks further dampened sentiment, leaving traders cautious ahead of the jobs report later in the week and the Federal Reserve's upcoming rate decision.
This broader negative sentiment overshadowed positive company-specific developments for Udemy. On the same day, the company announced the appointment of a new Head of Content, Instructor & Creator Strategy.
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What Is The Market Telling Us
Udemy’s shares are very volatile and have had 20 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 13 days ago when the stock dropped 3.5% on the news that the major indices continued to pull back, with technology stocks accounting for most of the market's largest decliners. A key reason for this trend is that much of the recent market gains were concentrated in the "AI trade," which includes these large technology and semiconductor companies. So this could also mean that some investors are locking in some gains ahead of more definitive feedback from the Fed.
Despite the downturn, some analysts viewed this as an opportunity to own some of the "Core AI winners." Dan Ives of Wedbush Securities commented, "In our view, the tech bull cycle will be well intact for at least another 2-3 years, given the trillions being spent on AI infrastructure/software/chips/power/apps looking ahead. This remains our tech playbook and investor roadmap."
Additionally, mixed earnings reports from retailers, such as Target, have added to the market's weakness. Investors are closely monitoring these reports for insights into the broader economic health and the potential impact of new tariffs on inflation.
Udemy is down 19.5% since the beginning of the year, and at $6.64 per share, it is trading 34.3% 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 $241.28.
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