306 Global Education Stocks lost $120B of value in 2021, down 40%

2022 opened with 306 listed education companies, dropping $146B in market cap in 2021 (mostly China), before gaining $26B through 20 IPOs.

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2021 was a record year for listed education companies. From historic drops in aggregate value, mostly driven by regulatory changes, to record IPOs in the US marking a wave of EdTech 'exits'. The global market closed the year with 47 education stocks > $1B market cap, 18 IPOs, 2 SPACs and 6 acquisitions/'go-privates'. A long line of IPO/SPAC hopefuls, led by none other than ByJu's, are watching a cooler capital markets landscape for the right timing to join this special cohort.

306 listed education companies powered by more than 800,000 professionals and teachers from publishing and content to schools, management systems, digital learning and tutoring, generate more than $82B in revenue. Through 2020, as COVID hit, the collective cohort increased its total value by $88B, moving from $224B in aggregate value at the start of 2020, to close the year after a total of 15 IPOs worth more than $312B.

2021 started out with all the momentum of 2020 and then some. Coursera and Duolingo set the scene, two flagship IPOs representing highly respected and successful EdTech companies making their debuts on the NYSE and Nasdaq respectively. The two companies alone also brought more than $10B combined of market cap at IPO, handsomely rewarding the investors powering and participating in their growth to date. 20 IPOs in total through 2020 added $26B+ of value by year end, to finish the year with a combined $192B Market Cap for all education stocks. Almost all IPOs lost value from listing through the year. The largest from the 2021 IPO cohort by year end and finishing with > $1B market caps included KnowBe4, Duolingo, Coursera, Instructure, Powerschool, Zhihu, Udemy and Skillsoft (SPAC).

By mid year, the slide had started and a record half year for IPOs had been tempered with a record decline in value, driven primarily by China’s education giants re-rating under a new regulatory regime. The second half of the year saw what was uncertainty in Chinese regulation rapidly crystallise into policy, whipping out $100B+ in market cap in the space of a week. By way of example, New Oriental, one of the largest and most respected companies in the Chinese education market, saw its market value plunge by 90%, revenue fall 80%, and 60,000 employees were dismissed in the space of a few months. The gross $146B loss over the course of the year was in large part driven by five stocks losing $113B in value, namely TAL, New Oriental, Offcn, Gaotu (GSX) and Chegg.

On the plus side, IDP led the big gainers through the year, adding $2.7B of value, followed by HMH adding $1.5B of market cap. Another 25 stocks added more than $100m of value together through the year, a major decline however compared to the $78B of organic value creation in 2021.

2022 opened with 306 listed education companies, having dropped $146B in market cap through 2021 (mostly China), before gaining $26B through 20 IPOs.

The global education market closed 2021 with 306 education stocks. 47 companies finished the year trading with a $1B+ market cap, we saw 18 IPOs, 2 SPACs, 6 acquisitions/’go-privates’ and a handful of closures.

More American Education companies IPO’d in 2021 than the previous six years combined. China’s decade dominating IPO’s appears over. ByJu's might be the most anticipated IPO/SPAC in education history however, with expectations of a $40B+ market cap, loaded with local Indian regulatory challenges regarding a listing in the US and global capital markets more uncertain as 2022 unfolds.

Although still underweight in the capital markets compared with other sectors, the number of education IPOs has seen healthy growth and then moderated over the past decade, with 20 IPOs in 2021.

2021 was filled with ‘poster’ brand IPOs in North America with the first major batch of EdTech exits such as Duolingo, Coursera, Udemy, D2L, Keypath, Powerschool and Thinkific and for two more SPACs in Nerdy (Varsity Tutors) and Skillsoft.

Asia Pacific, predominantly China, until recently dominated the IPOs in education with an explosion of HK and NYSE/NASDAQ IPOs through the middle of the decade which has moderated over the past few years and unlikely to continue for some time.

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