Arco Platform: Financial Risks Loom Large

Dec. 09, 2022 2:42 AM ETArco Platform Limited (ARCE)
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Summary

  • Arco’s Q3 profitability fell short of expectations after adjusting for share-based comp.
  • With Arco heading for the lower end of its EBITDA guidance and having to navigate an elevated debt load, the financial risks are elevated here.
  • The stock also trades above the go-private offer from General Atlantic, capping the upside.
EdTech Education Technology concept, e-learning

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Despite Brazil-based edtech company Arco Platform’s (NASDAQ:ARCE) strong Q3 growth, margins (excluding share-based compensation) were less than satisfactory, driving expectations for this year’s adj EBITDA margin to come in close to the bottom of the guidance range. Meanwhile, the company’s

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Disclosure: I/we have no stock, option or similar derivative position in any of the companies mentioned, and no plans to initiate any such positions within the next 72 hours. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

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