The 3P Learning Ltd (ASX: 3PL) share price has surged around 40% in the past 3 weeks. Let's look at what's fuelling this ASX share price growth and whether it's time to invest in the company.
Why is the 3P Learning share price surging?
Since 3P Learning has not released any price sensitive news in the past 3 weeks, it could be assumed that investors are jumping on the company's shares as fears grow of a 'second wave' of the coronavirus pandemic. As a result, with a new school term beginning and debate lingering over whether kids should return, the services offered by 3P Learning could see greater demand.
3P Learning is an online education platform that offers a range of resources that cover core subjects such as mathematics, spelling, literacy and science. The company's platform currently boasts more than 5 million students from over 17,000 schools around the world.
How has this ASX share performed during the pandemic?
With many schools and institutions closing during the pandemic, there has been a rush to online education platforms. In a business update released in late April, 3P Learning reported an increase in demand for its products and services. According to the company's management, 3P Learning expanded its staff by 10% and released 10,000 new activities in order to accommodate the demand.
In the company's most recent business update released in late June, 3P Learning announced a US$10 million agreement with the National Ministry of Education in the Middle East. The deal will see 3P Learning provide Mathletics licenses and professional development services over a 12-month period.
Should you buy?
The coronavirus pandemic has forced traditional teaching at schools and institutions to adapt to online modes of education. Although online education providers like 3P Learning won't be able to replace traditional teaching methods, they could serve as an excellent auxiliary service in the long term. Despite the optimism, it's also important to note the budget restrictions of education providers as they adapt to online education modes.
Personally, I really don't like buying ASX shares that have rallied so hard in a short period of time, instead I prefer getting set to invest when a company's share price is basing. I think a prudent strategy would be to either wait for the 3P Learning share price to consolidate or do further research on other education companies that could benefit in the short and long term.
