Can Investors Make Money by Investing in E-Learning Stocks?
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E-Learning Stock Graph |
I decided to answer that question by choosing five e-Learning companies whose stocks looked promising on September 30th and investing $2,000.00 on paper in each of them. I tracked these stocks until December 9th and used my results to analyze the potential for investing in e-Learning companies. Below are my results as well as my extrapolation about the industry’s potential. The companies I chose to track were Blackboard Inc., Adobe Systems Inc., e-College, Laureate Education, and Plato Learning. After investing $2,000.00 (on paper) in each stock on September 30th and following the stocks through December 9th, my return on investment percentages are as follows.
Blackboard Inc. 28.60%
Adobe Systems Inc. 19.26%
e-College 19.50%
Laureate Education 9.98%
Plato Learning -2.49%
My overall return on investment for these e-Learning stocks was 14.97%. This was 10.11% higher than NASDAQ. It was also 11.88% higher than other e-Learning stocks. Thus, the result of the e-Learning stocks I chose shows that there is strong potential for investing in e-Learning companies. My selections were based on the longevity of the companies, quality of their offerings, as well as perceived financial health. The individual companies are analyzed in the context of current industry trends as well as future investment potential below.
The top two stocks that provided the greatest ROI of those I chose fall into the educational infrastructure provision category. Blackboard Inc., which provided the greatest return on investment, offers enterprise level Learning Management System software to schools and universities, textbook publishers as well as others in the education sector (Stanton, 2005). E-College provides distance education infrastructures including the necessary technology and services for institutions that want to offer online learning programs. Their goal centers on creating complete educational programs by working closely with the educational institutions that are their customers (e-College, n.d.).
In Downes (2005) analysis, e-Learning infrastructures are moving toward a more service oriented approach as opposed to a software product oriented approach. This is due to the growing acceptance and production of open source alternatives to traditional software companies. However, this is a slow moving trend because of the many relationships vendors already have with educational institutions and the lack of significant advertising from open source software providers. Thus, the short term outlook for companies providing e-Learning infrastructure and infrastructure support is positive due to the need institutions have for stable and efficient systems. The long term outlook is that the focus of companies providing infrastructure products may shift to a more service oriented role of providing support for their products.
Adobe Systems Inc. is a provider of e-Learning content development tools. The software provided by Adobe since their recent acquisition of Macromedia Inc. has very few competitors that offer an integrated suite of development tools. As with e-Learning infrastructure companies, open source software may provide significant competition down the road. These open source solutions are not industry standard tools nor do they provide tools of comparable quality at this time. On the other hand, the integration of tools from Macromedia and Adobe will provide customers with a very strong content development solution that can integrate the various forms of multimedia including video, audio, graphics, etc. (MACNN, 2005). Thus, it looks as though Adobe Systems Inc. will remain strong in the short term. The company also has long term potential if it is able to leverage and integrate both companies’ software.
Laureate Education Inc. (previously Sylvan Learning Systems) provides courses through a worldwide network of brick and mortar institutions and online universities. Laureate Education Inc. removed itself from the K-12 business sector so as to focus solely on post-secondary education. Since this decision, revenues have increased for Laureate Education, Inc. as a result (Laureate Education Inc., 2005). Due to the worldwide scale of their potential audience, Laureate Education Inc. has much room for future growth. As e-Learning companies become more and more global, some factors important for success will be strategic use of technology that takes into account the target industry’s culture and unique needs. Additionally, personalized learning and informal learning are two trends that are influencing the secondary education market (Downes, 2005). Companies will need to make use of technologies such as advanced search and collaboration tools, for example, that take these trends into account in order to remain competitive. Overall, if Laureate Education Inc. remains current with student needs and industry trends, they should remain stable in the coming year.
In contrast to Laureate Education Inc., Plato Learning, Inc. provides customized educational software and learning content to people from kindergarten to adult. Their products incorporate web-based assessments, standards compliance, and provide instruction in areas such as career development (Plato Learning, 2005). This was the only stock in my portfolio that decreased in value. Downes (2005) had predicted that educational content businesses would take the greatest hit from the increasing amount of educational content offered for free on the web such as MIT’s OpenCourseWare initiative, for instance. Not only are many instructors developing their own materials but students are also. Unlike infrastructure providers, educational content providers are presently up against stiff competition from widely available free content. As this not-for-profit content increases, commercial content providers will gradually decline. Thus, the short term (and long term) outlook for customized educational content providers does not look promising.
Overall, there appears to be potential for investing in e-Learning companies if one pays attention to market trends and researches potential businesses. Of course no investment is certain to yield a profit. However, there are viable opportunities for investing in the field of e-Learning which shows the strength of the industry and its potential for sustainability.
References
Downes, S. (2005, July 10). The economy of e-Learning. Retrieved December 14, 2005 from www.downes.ca/cgi-bin/page.cgi
e-College (n.d.). About eCollege. Retrieved December 14, 2005 from www.ecollege.com/company/About.learn
Laureate Education Inc. (2005). About Laureate Retrieved December 15, 2005 from www.laureate-inc.com/alCompProfile.php
MACNN (2005, April 18). Adobe to acquire Macromedia for $3.4 billion. Retrieved December 14, 2005 from
www.macnn.com/articles/05/04/18/adobe.to.buy.macromedia/
Plato Learning (2005). About Us. Retrieved December 15, 2005 from www.plato.com/aboutus/index.asp
Stanton, M. J. (2005, Oct. 12). Blackboard Inc. provides initial fy 2006 guidance and reaffirmed guidance for 2005. Retrieved December 14, 2005 from investor.blackboard.com/phoenix.zhtml=