Is Coursera (COUR) a Mispriced Opportunity in Online Education?

The 85% decline in Coursera's (COUR) stock price since its 2021 peak has sparked debate over whether the company is a mispriced opportunity or a cautionary tale of overcorrection. With the stock trading at $7.94 as of November 26, 2025 according to Yahoo Finance, and a DCF-derived intrinsic value of $17.78, the valuation dislocation is stark. This analysis examines the interplay of financial metrics, strategic shifts, and market dynamics to determine whether the plunge reflects enduring challenges or a mispricing of Coursera's long-term potential.

Valuation Dislocation: DCF vs. Market Sentiment

Coursera's current valuation appears to diverge sharply from its intrinsic value. A DCF analysis from a recent report estimates the company's intrinsic value at $17.78 per share, based on projected free cash flows over the next decade. At this level, the stock is undervalued by roughly 55% relative to its current price. However, other DCF models paint a more nuanced picture. For instance, a 5-year EBITDA exit model suggests an intrinsic value of $1.08 per share, while a 10-year model estimates $13.90. These discrepancies highlight the sensitivity of valuation models to assumptions about growth rates, discount rates, and cash flow projections.

Coursera's price-to-sales (P/S) ratio of 1.8x further underscores the valuation debate. This metric exceeds both the peer average of 1.5x and the US Consumer Services industry average of 1.4x. While a higher P/S ratio might signal overvaluation, it could also reflect investor optimism about Coursera's unique position in the online education market. Notably, the company's P/S ratio is also above its estimated fair ratio of 1.1x, suggesting a potential disconnect between market pricing and fundamental growth prospects.

Strategic Consolidation: The Udemy Merger

The most transformative development for Coursera in 2025 is its $2.5 billion merger with Udemy, a deal expected to close by mid-2026. This all-stock transaction combines Coursera's academic partnerships with Udemy's AI-driven course marketplace, creating a platform poised to dominate the AI-native education sector. The merger is projected to generate $115 million in annual cost synergies within 24 months and pro forma revenue exceeding $1.5 billion.

Strategically, the merger addresses a critical challenge for both companies: scaling in a market where growth has slowed. By integrating Udemy's dynamic course library with Coursera's university-backed credentials, the combined entity aims to offer a comprehensive solution for workforce upskilling in the AI era. This alignment with AI literacy-a rapidly expanding field-could unlock new revenue streams and justify a premium valuation.

Growth Slowdown and Market Realities

Coursera's decline from its 2021 high reflects broader challenges in the online education sector. The post-pandemic surge in demand for digital learning has moderated, and competition from free or low-cost platforms has eroded pricing power. Additionally, macroeconomic headwinds, including inflation and tighter corporate training budgets, have dampened revenue growth.

However, the merger with Udemy introduces a catalyst for renewed growth. The combined company's expanded course catalog and AI-driven personalization tools could attract a broader audience, including enterprises seeking scalable upskilling solutions. Analysts note that the merger's success hinges on effective integration and the ability to capitalize on AI-driven learning trends.

Is the Decline a Mispricing or a Warning?

The current valuation appears to underweight the strategic and operational benefits of the Udemy merger. While the DCF-derived intrinsic value of $17.78 assumes steady cash flow growth over a decade, the merger's synergies and expanded market reach could accelerate this trajectory. Conversely, the P/S ratio of 1.8x suggests the market is skeptical about Coursera's ability to sustain growth without further consolidation.

Investors must weigh these factors against execution risks. Regulatory hurdles, integration challenges, and the competitive landscape could delay or dilute the merger's benefits. Yet, if the combined entity successfully leverages AI and global partnerships, the current discount to intrinsic value may represent a compelling opportunity.

Conclusion

Coursera's 85% decline from its 2021 peak reflects a market grappling with the company's growth slowdown and valuation uncertainties. However, the DCF-derived intrinsic value of $17.78 and the strategic merger with Udemy suggest that the stock's current price may not fully capture its long-term potential. While risks remain, the alignment with AI-driven education and the prospect of cost synergies position Coursera to reclaim its role as a leader in the sector-if the merger delivers on its ambitious vision.