While China clamps down on its edtech sector, other players outside China are hitting record numbers in the burgeoning online education industry.
Language-learning app Duolingo Inc posted a valuation of $6.5 billion after its shares rose nearly 40% in the company’s Nasdaq debut on Wednesday, a move that impressed Wall Street. Became the latest education technology startup.
Duolingo’s stock opened at $141.4 per share, surpassing its initial public offering price (IPO) of $102 per share, which crossed the top end of its target range. The stock traded some gains later in the afternoon at $130.92.
Currently, Duolingo’s largest market is the United States, which is home to 20% of its users and brings in 45% of the company’s revenue, Von Ah said.
Duolingo raised approximately $521 million in the IPO by selling approximately 5.1 million shares. About 1.4 million of those shares were sold by existing shareholders and the proceeds will not go to the company.
Earlier this week, the company raised its price target range from estimates of between $85 and $95 per share to between $95 and $100 per share.
The company was founded in 2011 by Von Ah and Severin Hacker, who met at Carnegie Mellon University. Goldman Sachs & Company and Allen & Company are the principal underwriters for the IPO.
The company’s flotation comes at a time of growing investor interest in the edtech space, after pandemic restrictions sent students and teachers from the classroom to the web.
“Being a public company will allow us to operate at a higher level and move from minor league to major league,” said Duolingo co-founder and CEO Louis von Ahn.
Von Ah said that after the IPO, the company will focus on improving its flagship app and switching more active users to paying customers. Duolingo offers courses in 40 languages ??to approximately 40 million monthly active users.
The company plans to expand further in Asia, which is its fastest growing region.
Last week, Chinese authorities ordered edtech companies operating in China to become non-profit, killing without warning, the $100 billion valued edtech industry, and inadvertently opened the way for western-based online schools to dominate Asia. Though Duolingo and other edtech companies will find it hard finding their way into China, unless they play by the non-profit rules, they will likely grab a large share of the Asian market in the stead of Chinese edtech companies.
With the pandemic yet to be contained and more people embracing online education, more edtech companies are expected to post more numbers in valuation.