The IDP Education Ltd (ASX: IEL) share price is having a very disappointing start to the week.
In afternoon trade, the language testing and student placement company's shares are down 14% to $22.19.
This compares very unfavourably to a 1% gain by the ASX 200 index on Monday.
Why is the IDP Education share price crashing?
Investors have been hitting the sell button in a panic today amid some potentially bad news out of Canada.
In case you're not familiar with IDP Education, it is the co-owner of the IELTS test. This is the English language test taken by over three million people every year. It is accepted by more than 11,000 employers, universities, schools, and immigration bodies around the world.
Up until this weekend, it was the language test that students needed to take and pass to be granted a student visa in Canada. However, Immigration, Refugees and Citizenship Canada (IRCC) has now opened the door to four new English tests, ending IELTS' monopoly.
This is potentially very bad news for IDP Education in Canada. It is likely to lead to a sharp increase in competition in August when the new tests will begin to be accepted. Gone are the days when students would be forced to come to one company for the test. Now they have options. This could mean price reductions to compete and/or increased marketing costs.
Judging by the weakness in the IDP Education share price today, investors appear concerned that Canada may be just the beginning. Whether that proves to be the case, time will tell. But if it is, it will be a very different operating environment for the company in the future.
