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Chegg (CHGG)
NYSE:CHGG

Chegg (CHGG) AI Stock Analysis

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Chegg

(NYSE:CHGG)

Rating:40Underperform
Price Target:
$1.50
▲(2.04%Upside)
Chegg's overall score reflects significant financial and operational challenges, including declining revenues, restructuring efforts, and poor technical and valuation metrics. The company's strategic initiatives may stabilize the situation, but current conditions are challenging.
Positive Factors
Business Strategy
Chegg is combating challenges with product innovation, new B2B sales initiatives, and a social media-focused marketing campaign to improve brand awareness.
International Expansion
Progress on international localization efforts could expand Chegg's market reach and customer base.
Strategic Review
Chegg has filed a complaint against Google and Alphabet and intends to explore strategic alternatives, which has the potential to unlock shareholder value.
Negative Factors
Financial Performance
1Q25 guidance for revenue and adjusted EBITDA came in materially below consensus expectations.
Market Competition
The company's AI-fueled struggles continue as Google AIO negatively impacts web traffic.
Subscriber Trends
Declining negative growth and subscribers missing expectations supported the Underweight thesis for Chegg Inc.

Chegg (CHGG) vs. SPDR S&P 500 ETF (SPY)

Chegg Business Overview & Revenue Model

Company DescriptionChegg, Inc. is an American education technology company based in Santa Clara, California. It provides digital and physical textbook rentals, online tutoring, and other student services. Chegg primarily caters to college and high school students, offering a range of educational materials and resources to help with their academic and career success. The company's core products and services include textbook rentals, homework help, online tutoring, and study resources like Chegg Study, Chegg Writing, and Chegg Math Solver.
How the Company Makes MoneyChegg makes money through a variety of revenue streams. The primary source of revenue is its subscription services, which include Chegg Study, Chegg Writing, Chegg Math Solver, and Chegg Tutors. These services offer educational tools and resources on a subscription basis, providing students with access to step-by-step solutions, expert Q&A, writing assistance, and tutoring support. Another significant revenue stream is the rental and sale of textbooks, both digital and physical, which Chegg offers through its online platform. Additionally, Chegg generates revenue through advertising and partnerships with educational institutions and other companies in the education sector. These partnerships often involve integrating Chegg’s services into the educational offerings of these institutions, enhancing their reach and usability.

Chegg Key Performance Indicators (KPIs)

Any
Any
Subscribers
Subscribers
Monitors the number of active users paying for services, indicating the company's market reach, customer retention, and potential for revenue growth.
Chart InsightsChegg's subscriber base has sharply declined from its peak in 2022, reflecting significant challenges amid macroeconomic pressures and increased competition from AI companies. Despite a strategic pivot towards business institution efforts and successful licensing agreements, the company is undergoing restructuring with substantial layoffs to align costs with its outlook. While Chegg is optimistic about new initiatives like Busuu, the ongoing decline in subscribers underscores the urgency of these strategic shifts to stabilize and potentially grow its user base in a competitive landscape.
Data provided by:Main Street Data

Chegg Earnings Call Summary

Earnings Call Date:May 12, 2025
(Q1-2025)
|
% Change Since: 113.04%|
Next Earnings Date:Aug 11, 2025
Earnings Call Sentiment Neutral
The earnings call highlighted Chegg's strategic efforts to diversify revenue and expand its business institution efforts, along with successful licensing agreements. However, significant revenue declines, restructuring with layoffs, and ongoing macroeconomic challenges suggest a difficult operating environment.
Q1-2025 Updates
Positive Updates
Exceeded Q1 Revenue and EBITDA Guidance
Chegg surpassed its revenue and adjusted EBITDA guidance for Q1 2025, generating approximately $16 million in free cash flow.
Expansion of Business Institution Effort
The business institution effort expanded from 5 to 15 pilots from Q4 to Q1, with a goal to reach 40 by the end of the year.
Successful Licensing Agreements
Chegg signed two agreements to license question-and-answer pairs to language model companies, generating $4 million in Q1 and expecting an additional $7 million in Q2.
Busuu Revenue Growth
Busuu, Chegg's language learning service, saw Q1 revenue increase by 7% year-over-year, with a 29% year-over-year revenue increase in its B2B business.
Chegg Skills Pilot Programs
Chegg Skills entered pilot programs with EdifyOnline and Noodle, focusing on AI programs to support a higher education initiative in India.
Negative Updates
Significant Revenue Decline
Total revenue for Q1 2025 was $121 million, a decrease of 30% year-over-year, with Subscription Services revenue declining 31%.
Restructuring and Layoffs
Chegg announced a restructuring plan, impacting 248 employees (22% of the workforce), with significant cost-cutting measures including closing offices in the US and Canada.
Ongoing Macroeconomic and Industry Challenges
Macroeconomic trends and industry challenges, including AI competition from companies like Google and OpenAI, continue to pressure Chegg's business.
Q2 Financial Outlook
Guidance for Q2 expects total revenue between $100 million and $102 million, reflecting continued financial pressures.
Company Guidance
During the Chegg First Quarter 2025 Earnings Call, the company reported a revenue of $121 million, a 30% decrease year-over-year, and an adjusted EBITDA of $19 million with a 16% margin. They generated approximately $16 million in free cash flow and executed two content licensing deals with leading tech companies, generating $4 million in Q1, with an expected additional $7 million in Q2. Chegg also announced a restructuring plan that will result in $45 million to $55 million in savings for 2025 and $100 million to $110 million in 2026, affecting 22% of its workforce. Despite these challenges, Chegg is optimistic about its new business initiatives, including the expansion of its business institution effort and licensing agreements, expecting Busuu to achieve $48 million in revenue in 2025 and be adjusted EBITDA positive by the first quarter of 2026. The company also plans to align costs with its business outlook amid macroeconomic pressures and ongoing industry challenges. For Q2, Chegg expects total revenue between $100 million and $102 million and gross margin to be in the range of 64% to 65%.

Chegg Financial Statement Overview

Summary
Chegg faces significant financial challenges, particularly with declining revenue and profitability. The income statement shows negative profit margins, and the balance sheet reveals diminishing financial stability. Although cash flows are positive, they are declining, underscoring the need for strategic changes.
Income Statement
35
Negative
The income statement reveals significant challenges with profitability. There is a negative trend in revenue with a consistent decline from 2023 to the TTM 2025 period. Both EBIT and Net Income margins are negative, indicating struggles with operational efficiency and high expenditures. The declining revenue and negative profit margins are concerning, reflecting a need for strategic adjustments.
Balance Sheet
45
Neutral
The balance sheet shows a weakening financial position with declining total assets and stockholders' equity. The debt-to-equity ratio has improved slightly, reflecting better leverage management, yet the equity ratio has also decreased, indicating potential risks. Overall, the balance sheet highlights diminishing financial stability with significant reductions in equity and asset base.
Cash Flow
55
Neutral
The cash flow statement reflects some positive aspects, such as a positive free cash flow, although it has decreased year over year. The operating cash flow to net income ratio is strong due to negative net income, but this underscores operational challenges. Despite positive cash flow metrics, the substantial decline in free cash flow growth raises concerns about sustainability.
Breakdown
TTMDec 2024Dec 2023Dec 2022Dec 2021Dec 2020
Income StatementTotal Revenue
564.61M617.57M716.29M766.90M776.26M644.34M
Gross Profit
376.21M436.65M528.60M569.50M521.36M438.92M
EBIT
-763.62M-737.11M-67.72M8.96M78.11M56.75M
EBITDA
-664.41M-607.43M183.80M105.79M86.77M127.85M
Net Income Common Stockholders
-853.13M-837.07M18.18M266.64M-1.46M-6.22M
Balance SheetCash, Cash Equivalents and Short-Term Investments
88.29M315.72M330.01M1.06B1.55B1.15B
Total Assets
438.77M868.95M1.73B2.47B2.92B2.25B
Total Debt
80.27M504.46M617.90M1.21B1.70B1.53B
Net Debt
36.17M342.98M482.14M735.78M843.19M1.05B
Total Liabilities
253.10M675.97M782.62M1.35B1.81B1.64B
Stockholders Equity
185.67M192.98M944.62M1.12B1.11B609.63M
Cash FlowFree Cash Flow
40.81M50.25M163.15M152.64M179.04M155.13M
Operating Cash Flow
96.41M125.20M246.20M255.74M273.22M236.44M
Investing Cash Flow
327.07M11.35M268.67M104.89M-365.77M-732.79M
Financing Cash Flow
-521.81M-109.14M-852.77M-744.80M466.72M588.63M

Chegg Technical Analysis

Technical Analysis Sentiment
Positive
Last Price1.47
Price Trends
50DMA
0.84
Positive
100DMA
0.99
Positive
200DMA
1.41
Positive
Market Momentum
MACD
0.21
Negative
RSI
65.86
Neutral
STOCH
62.57
Neutral
Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CHGG, the sentiment is Positive. The current price of 1.47 is above the 20-day moving average (MA) of 1.16, above the 50-day MA of 0.84, and above the 200-day MA of 1.41, indicating a bullish trend. The MACD of 0.21 indicates Negative momentum. The RSI at 65.86 is Neutral, neither overbought nor oversold. The STOCH value of 62.57 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Positive sentiment for CHGG.

Chegg Risk Analysis

Chegg disclosed 48 risk factors in its most recent earnings report. Chegg reported the most risks in the "Finance & Corporate" category.
Finance & Corporate - Financial and accounting risks. Risks related to the execution of corporate activity and strategy
Latest Risks Added 0 New Risks

Chegg Peers Comparison

Overall Rating
UnderperformOutperform
Sector (62)
Financial Indicators
Name
Overall Rating
Market Cap
P/E Ratio
ROE
Dividend Yield
Revenue Growth
EPS Growth
74
Outperform
$3.25B11.6031.14%1.26%140.30%
73
Outperform
$1.39B-10.84%7.26%39.62%
71
Outperform
$1.11B-27.17%5.43%14.22%
62
Neutral
$11.92B10.48-7.50%2.95%7.40%-8.18%
61
Neutral
$969.40M-36.29%58.34%-602.43%
DADAO
60
Neutral
$1.07B51.5225.15%-2.04%
40
Underperform
$166.25M-148.48%-19.69%-6735.07%
* Technology Sector Average
Performance Comparison
Ticker
Company Name
Price
Change
% Change
CHGG
Chegg
1.47
-1.57
-51.64%
LAUR
Laureate Education
22.05
7.76
54.30%
GOTU
Gaotu Techedu
3.99
-1.14
-22.22%
DAO
Youdao
8.80
5.05
134.67%
COUR
Coursera
8.50
1.80
26.87%
UDMY
Udemy Inc
7.15
-1.50
-17.34%

Chegg Corporate Events

Shareholder MeetingsBusiness Operations and Strategy
Chegg Holds 2025 Annual Stockholders Meeting
Neutral
Jun 6, 2025

On June 4, 2025, Chegg, Inc. conducted its 2025 Annual Meeting of Stockholders. The meeting was a significant event for the company, providing insights into its strategic direction and potential impacts on its operations and stakeholder interests.

The most recent analyst rating on (CHGG) stock is a Hold with a $3.00 price target. To see the full list of analyst forecasts on Chegg stock, see the CHGG Stock Forecast page.

Business Operations and Strategy
Chegg Announces Major Workforce Restructuring Plan
Negative
May 12, 2025

On May 12, 2025, Chegg announced a restructuring plan that involves reducing its global workforce by approximately 22%, impacting 248 employees, and other measures to streamline operations. This decision is in response to ongoing industry challenges affecting the business, such as a decline in traffic. The company expects to incur charges between $34 million and $38 million, primarily for employee transition and severance payments, with most charges anticipated by the fourth quarter of 2025. Chegg also negotiated an early termination of its Santa Clara headquarters lease, effective December 31, 2025, which will reduce lease obligations by $5.3 million.

The most recent analyst rating on (CHGG) stock is a Hold with a $3.25 price target. To see the full list of analyst forecasts on Chegg stock, see the CHGG Stock Forecast page.

Delistings and Listing ChangesStock Split
Chegg Faces NYSE Delisting Notice for Low Share Price
Negative
Apr 4, 2025

On April 1, 2025, Chegg, Inc. received a notice from the New York Stock Exchange (NYSE) for non-compliance with the minimum share price requirement, as its average closing share price was below $1.00 over a 30-day period. The company intends to regain compliance within a six-month cure period, potentially through a reverse stock split, and will continue to trade on the NYSE during this time. Failure to comply could lead to suspension and delisting procedures.

Glossary
BuyA stock rated as a "Buy" is expected to perform better than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock is likely to deliver higher returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
HoldA stock rated as a "Hold" is expected to perform in line with the overall market or a specific benchmark. This rating indicates that the stock is neither particularly compelling nor unfavorable for investment. Note: This is not investment advice; please consult a financial advisor before making investment decisions.
SellA stock rated as a "Sell" is expected to perform worse than the overall market or a specific benchmark over the near-to-medium term. This rating suggests the stock may deliver lower returns compared to other stocks in the same sector or market index. Note: This is not investment advice; please consult a financial advisor before making investment decisions.

Disclaimer

This AI Analyst Stock Report is automatically generated by our AI systems using advanced algorithms and publicly available financial, technical, and market data. While the information provided aims to be accurate and insightful, it is intended for informational purposes only and should not be considered financial advice. Any content created by an AI (Artificial Intelligence) system may contain inaccuracies and/or contain errors. Investing in stocks carries inherent risks, and past performance is not indicative of future results. This report does not account for your personal financial circumstances, objectives, or risk tolerance. Always conduct your own research or consult with a qualified financial advisor before making investment decisions. The analysis and recommendations provided are based on historical and current data and may not fully reflect future market conditions or unexpected developments. Neither the creators of this report nor its affiliated entities guarantee the accuracy, completeness, or reliability of the information presented. Use this report at your own discretion and risk.