The IDP Education Ltd (ASX: IEL) share price has quietly lost almost 20% of its value during the past month. The company’s shares were cruising nicely in November, rising by an equivalent 20% after news of successful COVID-19 vaccine advancements broke out.
IDP shares have since gone on a downward spiral following the end of November, without the company making any major announcements to the market.
Here we’ll take a look at possible reasons why the IDP share price has lost so much value in one month.
What’s happening?
IDP Education is an English education company that conducts the International English Language Testing System (IELTS) for students.
The company’s main revenue source comes from mostly in-person English language testing, which basically relies on international students coming back to Australia.
Recent developments, however, have created obstacles to this taking place and hampered the possibility of a quick return of overseas students to this country.
For example, the Australian Government has continued to restrict its borders to international visitors indefinitely – and this restriction also applies to international students.
The IDP share price seems to be sensitive to any news that might restrict travel. For example, the company’s shares have retreated today, as have other ASX travel-related shares, after a spike of COVID-19 cases in New South Wales prompted fears of possible new state border restrictions.
Arguably, the IDP share price is also negatively impacted by any deterioration in Australia-China relations, as Chinese students make up a good portion of its student base.
For example, the IDP share price has fallen since China announced tariffs on Australian wines in late November – with its share price falling again when news came out about the Chinese ban on Australian coal this week.
About the IDP Education share price
Having said all that, the IDP Education share price has actually done well for the year, up around 13%, after the company made a quick pivot to online offerings.
The company first floated on the ASX in 2015 at an initial public offering (IPO) price of $2.65. It was trading below $10 per share for most of the period prior to 2019.
At the current price, the company commands a market capitalisation of $5.6 billion.
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Eddy Sunarto has no position in any of the stocks mentioned. The Motley Fool Australia’s parent company Motley Fool Holdings Inc. owns shares of Idp Education Pty Ltd. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.
The post Why the IDP Education (ASX:IEL) share price is down almost 20% in a month appeared first on The Motley Fool Australia.
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