Needham analyst Ryan MacDonald has reiterated their neutral stance on CHGG stock, giving a Hold rating yesterday.
Ryan MacDonald has given his Hold rating due to a combination of factors affecting Chegg’s current market position. The company is facing challenges from AI-driven competition, notably from Google’s AI offerings, which have adversely impacted Chegg’s web traffic. Although Chegg has reported better-than-expected results for the fourth quarter of 2024, its guidance for the first quarter of 2025 fell short of market expectations, indicating potential revenue and EBITDA issues.
Chegg is attempting to counter these challenges through product innovation, new business-to-business sales strategies, and a marketing campaign focused on social media to boost brand recognition. Despite these efforts, the benefits have not yet been substantial enough to counteract the immediate financial setbacks. Additionally, Chegg’s decision to file a complaint against Google and explore strategic alternatives adds an element of uncertainty, as it remains unclear whether these actions will lead to a favorable valuation for shareholders in the near term.