The past two years have been very good for the online world. More and more people have begun to shift their buying learning online, seeking to continue to educate themselves, despite the pandemic. As a result, phrases like “eLearning” and “virtual learning” have become commonplace.
Commercial companies, of course, have not been blind to this major shift in learning patterns, and have begun to offer more and more courses for people to purchase and take online. Indeed, some businesses have completely positioned themselves to do so.
One such example is Udemy (UDMY). The company, which was founded in 2010, offers over 183,000 (and growing) online video courses across a range of skills and educational areas. This gives consumers the opportunity to complete courses and learn at their own pace.
As you can imagine, this has provided people with an excellent chance to learn more and keep their skills sharp, even amidst the continuing pandemic. This would, in theory, make UDMY a sound financial investment.
However, before you rush out and invest in UDMY stock, there are a few things you should know. There are also a few research steps you must take before making such an investment. Thankfully, the information that you need to have before making such an investment is easily accessible.
The Fundamentals of Udemy
No matter how good you may think a stock is, or how perfectly it will fit your portfolio, you should never just throw money at a stock, thinking that it’s the right investment for you. There are a few factors you should explore before making any investment.
First and foremost, you always want to review a company’s basic information. Thankfully, this information is easy to find. You can always just check out Financhill’s stock information on Udemy.
This will list a variety of important financial metrics and show you the stock price movement over a selected period of time.
You can also use this information to see vital information on Udemy stock, including its revenue, net income, EPS, and more.
Most major company’s that allow you to invest in them have an entire section of their website dedicated to their investors, and Udemy is no exception. They have a robust investors website. Using this website, you can find the latest financial information about the company.
You can also find a variety of important corporate reports, including filings that the company made with the Security & Exchange Commission. Its latest quarterly filing, known as its 10-Q, can be found here.
If you are worried that you don’t have the expertise to completely understand this information, you can also rely on expert opinions in making your decision about whether or not to invest in Udemy. Many financial organizations will have publicly available reports and ratings about Udemy. You can get an overview of these ratings here.
As you can see, 11 analysts have made a formal rating of Udemy’s stock. 7 have rated it as a buy, 1 as a hold, and 3 as “overweight.” The overweight ratings mean that analysts believe that it will do better than other stocks in its market sector, thus making it a strong buy for people interested in investing in this area of the economy.
Diversification and Your Portfolio
After reviewing Udemy’s stock fundamentals, let’s say that you still believe it is a solid investment for your portfolio. Great! However, there are a few more steps you should take before investing in the company.
You want to make sure that your stock portfolio is appropriately diversified. This means you don’t have too much of your portfolio in one industry.
Why is this important? In theory, let’s say that there was some sort of event that particularly damaged a certain sector of the economy. If this was the case, you could see an array of stock declines and losses in that sector.
A good example would be what happened to the restaurant, retail, and tourism industry during the onset of the COVID pandemic. These stocks took a massive hit, and anyone who was not sufficiently diversified from these areas saw major losses.
Stock diversification cannot save you from a market-wide loss. However, having an appropriately balanced and diversified portfolio can absolutely ensure that you are protected from the worse losses. There are a few types of diversification to keep in mind before investing:
- Market sector: You want to ensure that you are not over-invested in one sector, like tech or consumer goods. Spreading your investments over multiple sectors is the best way to ensure that you aren’t too concentrated in one area.
- Size: There are small-cap, mid-cap, and large-cap investments. This refers to the market capitalization of the company. Different-sized companies move in different ways and respond differently to world events. As such, you want to make sure that you have a range of capitalizations in your portfolio.
- Style: Growth stocks are companies that you invest in because you believe they will appreciate fast. Value stocks are stocks that you believe are cheap compared to their real worth. A combination of the two can balance your portfolio so if growth stocks suffer faster declines, value stocks can often cushion the blow to your portfolio because they have more predictable cash flows.
- Other financial instruments: Remember, stocks are just one asset class of your portfolio – there are also bonds and other investing tools. This is not to say that you should alternate your investments dollar for dollar, but having a percentage of your portfolio allotted into bonds can protect against a major crash of the stock market.
How Much to Invest
Finally, let’s say you’re ready to invest in Udemy. There is one critical question left: How much should you invest in the stock?
Remember, at the end of the day, you only have X dollars to invest. As such, you need every dollar that you invest in the market to perform at its maximum possible efficiency. Thus, there are a few considerations:
- What are your short-term and long-term goals? How much can you afford to invest in the market – and how much do you want to invest?
- How will your Udemy investment affect the overall balance of your portfolio? Will you need to make additional purchases or share to ensure that your portfolio is still appropriately diversified?
- Can your money be better spent elsewhere? Remember, you’re not just dealing with the potential of gains or losses in Udemy stock – you are looking at the money that you won’t gain by investing your money elsewhere. If you are unsure whether Udemy will perform better than another investment, can you split that investment into another stock? How will that purchase then impact the overall value of your portfolio?
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