IDP Education Ltd (ASX: IEL) shares are having another tough session on Tuesday.
In morning trade, the ASX 200 stock is down 38% to $4.66.
Why is this ASX 200 stock sinking?
Investors have been selling the language testing and student placement company's shares this morning after it released a disappointing market update.
According to the release, IDP Education's key destination markets continue to be impacted by policy uncertainty, which is negatively impacting the size of the international student market globally.
As a result, IDP Education is expecting to report a 28% to 30% drop in student placement volumes and an 18% to 20% decline in language testing volumes for FY 2025.
One positive is that the impact on revenue will be partially mitigated by continued strong average fee growth.
However, this still means that adjusted EBIT is expected to fall materially year on year. The ASX 200 stock revealed that its adjusted EBIT for FY 2025 is expected to be in the range of $115 million to $125 million. This is down by approximately 50% from $239 million in the prior corresponding period.
What's going on?
The release notes that core of the issue is the ongoing policy uncertainty across key destination markets.
The UK, Canada, Australia, and the US — all crucial for the ASX 200 stock — have seen shifting immigration rules and negative rhetoric around international students. In the UK, a new Immigration Policy White Paper is raising fresh concerns, while in Canada, demand is falling sharply as policy volatility bites. The US is also seeing a more challenging environment, and Australia isn't immune, with policy changes following recent elections.
All of this has squeezed IDP's student pipeline, particularly in the crucial May and June periods, which are key to the upcoming intakes in the UK, Canada, and the US, as well as the second semester in Australia.
Outlook
Despite the tough trading conditions it is facing right now, IDP Education remains positive on the long term. It explains:
IDP remains confident in the long-term structural growth drivers for the international education market. Governments in all key destination countries are currently seeking to temporarily reduce migration levels, and economic and geopolitical uncertainty has increased. Despite this, IDP believes the long-dated structural growth drivers that underpin the economic and social importance of the international education industry, and immigration more broadly, will support the market's sustainable long-term growth trajectory.
IDP Education shares are down 70% over the past 12 months.
