Is Caledonia (Private) Investments' Recent Doubling Down on Coursera Stock a Compelling Buy Signal for Value Investors?

The recent strategic moves by Caledonia (Private) Investments Pty Limited in the EdTech sector have sparked renewed interest among value investors. As a hedge fund with a long-short global equity strategy, Caledonia's decisions often carry analytical weight. Its latest actions-specifically, a 5.6% beneficial stake in Coursera (COUR) through 9,313,631 shares and a prior purchase of 1,011,587 shares at $7.94 per share on September 30, 2024-signal a clear bet on the resilience of AI-driven education platforms. For contrarian value investors, this raises a critical question: Does Caledonia's doubling down on Coursera represent a compelling buy signal, or is it a misstep in a market still grappling with skepticism about online learning's long-term viability?

Contrarian Value Investing and the EdTech Paradox

Contrarian value investing thrives on identifying undervalued assets in sectors where market sentiment lags fundamentals. Coursera, despite its recent financial strides, remains a polarizing name. Critics argue that the EdTech sector is inherently volatile, with shifting consumer preferences and regulatory uncertainties. However, Caledonia's investment suggests a belief in Coursera's ability to navigate these challenges.

Coursera's Q3 2025 results underscore this potential. The company reported $194 million in revenue, a 10% year-over-year increase, driven by 13% growth in its Consumer segment. Free cash flow for the quarter reached $27 million, reflecting improved operational efficiency. These metrics, combined with a raised full-year revenue guidance of $750–$754 million, indicate a business that is not only surviving but adapting to market demands.

From a valuation perspective, the data is mixed. A discounted cash flow (DCF) analysis estimates Coursera's intrinsic value at $13.90 per share, implying a 42.8% discount to its current price. Conversely, its price-to-sales ratio of 1.79x exceeds the industry average of 1.15x, suggesting overvaluation by this metric. Yet, a narrative-based analysis pegs a fair value of $12.23 per share, aligning with the DCF's conclusion that the stock is undervalued despite structural headwinds.

AI-Driven EdTech: A Contrarian's Edge

Caledonia's timing appears deliberate. The global AI in personalized learning and education technology market is projected to grow at a 41.4% CAGR from 2025 to 2034, reaching $208.2 billion by 2034. Coursera's strategic partnerships with AI pioneers, coupled with its expansion of Hindi-language courses and AI-driven learning tools in India, position it as a key beneficiary of this trend.

Moreover, Coursera's $7 billion valuation post-IPO reflects investor confidence in its scalable business model. The platform's ability to automate grading, personalize learning paths, and integrate real-time feedback through AI creates a moat that rivals struggle to replicate. For value investors, this technological edge-paired with a stock price that appears to discount future growth-could represent a rare opportunity to invest in a high-margin, high-growth sector at a discount.

Risks and Skepticism

No contrarian bet is without risk. The EdTech sector remains vulnerable to macroeconomic shifts, regulatory scrutiny, and the lingering question of whether online credentials will retain their value in a post-pandemic world. Coursera's reliance on corporate and university partnerships also introduces counterparty risk. Additionally, the price-to-sales ratio discrepancy highlights the need for caution; while DCF models are optimistic, they often assume long-term cash flow stability that may not materialize in a rapidly evolving industry.

Conclusion: A Calculated Bet for the Patient Investor

Caledonia's investment in Coursera aligns with the principles of contrarian value investing: it targets a misunderstood sector, leverages a company's structural advantages, and enters at what appears to be a valuation inflection point. While the EdTech market's volatility cannot be ignored, Coursera's financial resilience, AI-driven innovation, and expanding global footprint suggest that Caledonia's bet is not a gamble but a calculated play. For value investors with a long-term horizon, this could be a compelling signal to reassess Coursera's potential-not as a speculative play, but as a fundamentally sound business poised to capitalize on the AI revolution in education.