As public investors reprice edtech bets, what’s ahead for the hot startup sector?

Reports on November 9 that a COVID-19 vaccine looks incredibly effective moved the market. Software stocks sold off and long-suffering industries hammered by the pandemic saw their fortunes rise. It was odd to see airlines soaring and 2020 high-fliers like Zoom taking blows.

But amidst all that noise, another sector that has great import for startups was also taking lumps: edtech.

Looking at how a number of edtech companies traded in the aftermath of the vaccine news helps us understand how public investors view the companies and assess their long-term growth prospects.

Simply put, selling edtech on the vaccine news — as investors did — was a bet that growth in the sector would be constrained by a return to normalcy, something a solid vaccine could hasten. This is a related concept to what TechCrunch discussed regarding software’s own November 9 selloff — that investors were betting that future growth for those companies, boosted in 2020 by the pandemic shaking up how and where people worked, would be limited by a quick return to regular life.

The vaccine’s reported efficacy changed how investors see the future. But how much did it change investor expectations for the future of edtech? Let’s examine the public market results before asking our own edtech expert Natasha Mascarenhas on what she’s seeing in the numbers and hearing from investors.

Edtech companies in the public markets

There aren’t many public edtech companies, but TechCrunch surveyed those that we knew about. Here’s where three stood after the closing bell rang on Friday, November 3:

• 2U closed at $39.55 per share. It closed Monday after the vaccine news at $31.46. That price decline was worth about 20%. The company’s equity has been roughly flat since.
• Chegg closed Friday the 6th at $77.23 per share. It closed Monday, after the vaccine news, at $69.51. That price decline was worth around 10%. The company’s equity has fallen further since.
• Kahoot closed Friday the 6th at 64.60 Norwegian kroner (kr) per share. It closed Monday, after the vaccine news, at 59.00 kr. That price decline was worth around 9%. The company’s equity has fallen further since.