Chegg (CHGG) AI Stock Analysis

• Market Cap: $100.53M
• Dividend Yield: N/A
• Average Volume (3M): 2.43M
• Price to Earnings (P/E): ―
• Beta (1Y): 1.96
• Revenue Growth: -32.37%
• EPS Growth: 90.99%
• Country: US
• Employees: 1,241
• Sector: Consumer Defensive
• Sector Strength: 42
• Industry: Education & Training Services
• EPS (TTM): <0.01
• Shares Outstanding: 109,273,110
• 10 Day Avg. Volume: 1,689,776
• 30 Day Avg. Volume: 2,433,751
• PEG Ratio: >-0.01
• Price to Book (P/B): 0.86
• Price to Sales (P/S): 0.27
• P/FCF Ratio: 3.31
• Enterprise Value/Market Cap: 1.49
• Enterprise Value/Revenue: 0.33
• Enterprise Value/Gross Profit: 0.53
• Enterprise Value/Ebitda: 9.71
• 1Y Price Target: N/A
• Price Target Upside: N/A
• Rating Consensus: Moderate Sell
• Number of Analyst Covering: 2
• EPS Forecast (FY): -0.04
• Revenue Forecast (FY): $375.42M

• Rating: 47 Neutral
• Price Target: $0.89 ▼(-34.30% Downside)

Chegg's overall stock score is primarily impacted by its weak financial performance, characterized by declining revenue and profitability. The technical analysis supports a bearish outlook, while valuation concerns persist due to a negative P/E ratio. Although the earnings call indicates strategic shifts and cost reductions, significant challenges remain, particularly from AI competition and reduced Google traffic.

Positive Factors

Strategic Shift to Skilling Market

Chegg's strategic pivot to the skilling market positions it to capitalize on growing demand for workforce skills, potentially driving sustainable revenue growth.

Cost Reduction and Efficiency

Significant cost reductions enhance operational efficiency, potentially improving profitability and cash flow over the long term.

Positive Adjusted EBITDA Outcome

Exceeding EBITDA targets indicates effective cost management and operational execution, supporting financial stability.

Negative Factors

Significant Revenue Decline

A sharp revenue decline reflects challenges in maintaining market share and subscriber base, impacting long-term growth prospects.

Negative Free Cash Flow

Negative free cash flow limits financial flexibility and could hinder investment in growth initiatives, affecting future performance.

Challenges from AI and Google Traffic

Disruption from AI and reduced Google traffic challenges Chegg's ability to attract users, potentially impacting revenue and market position.

Chegg Business Overview & Revenue Model

Company Description

Chegg, Inc. is an American education technology company that provides a range of student services, primarily aimed at enhancing learning and academic success. Founded in 2005, Chegg operates in the education sector, offering core products and services such as textbook rentals, online tutoring, homework help, and study resources. The company supports students in their educational journeys by providing access to a wide array of learning tools and materials, including solutions for textbook problems and resources for exam preparation.

How the Company Makes Money

Chegg generates revenue through multiple streams, primarily from subscription services and textbook rentals. Its subscription model includes Chegg Study, which offers step-by-step textbook solutions, expert Q&A, and access to a library of study materials. Additionally, Chegg earns income from textbook rentals and sales, allowing students to rent or purchase academic materials at competitive prices. The company also monetizes services like Chegg Tutors, connecting students with tutors for personalized learning experiences. Strategic partnerships with educational institutions and content providers enhance its offerings, further driving user engagement and revenue growth.

Chegg Financial Statement Overview

Summary

Chegg faces challenges with declining revenues and profitability, as evidenced by negative margins and revenue growth rates. While the balance sheet shows improved leverage, the negative return on equity and declining cash flows highlight ongoing financial struggles. The company needs to address these issues to improve its financial health.

Income Statement

Chegg's income statement shows a declining trend in revenue with a negative growth rate of -11.62% in the TTM period. The company is struggling with profitability, as indicated by negative net profit and EBIT margins. Gross profit margin remains relatively strong at 64.77%, but the overall financial health is impacted by significant losses.

Balance Sheet

The balance sheet reflects a moderate debt-to-equity ratio of 0.51 in the TTM period, indicating manageable leverage compared to previous years. However, the return on equity is negative, highlighting challenges in generating returns for shareholders. The equity ratio is not provided, but the overall stability is affected by past high leverage.

Cash Flow

Cash flow analysis reveals a significant decline in free cash flow growth at -76.23% in the TTM period. The operating cash flow to net income ratio is 0.34, indicating some cash generation capability, but the free cash flow to net income ratio suggests limited free cash flow relative to net losses.

Breakdown	TTM	Dec 2024	Dec 2023	Dec 2022	Dec 2021	Dec 2020
Income Statement
Total Revenue	447.73M	617.57M	716.29M	766.90M	776.26M	644.34M
Gross Profit	280.98M	436.65M	490.35M	569.50M	521.36M	438.92M
EBITDA	15.39M	-607.43M	183.80M	201.59M	86.77M	127.85M
Net Income	-76.74M	-837.07M	18.18M	266.64M	-1.46M	-6.22M
Balance Sheet
Total Assets	378.27M	868.95M	1.73B	2.47B	2.92B	2.25B
Cash, Cash Equivalents and Short-Term Investments	96.39M	315.72M	330.01M	1.06B	1.55B	1.15B
Total Debt	83.04M	504.46M	624.74M	1.21B	1.70B	1.53B
Total Liabilities	232.22M	675.97M	782.62M	1.35B	1.81B	1.64B
Stockholders Equity	146.05M	192.98M	944.62M	1.12B	1.11B	609.63M
Cash Flow
Free Cash Flow	7.68M	50.25M	163.15M	152.64M	179.04M	155.13M
Operating Cash Flow	42.63M	125.20M	246.20M	255.74M	273.22M	236.44M
Investing Cash Flow	364.65M	11.35M	268.67M	104.89M	-365.77M	-732.79M
Financing Cash Flow	-520.43M	-109.14M	-852.77M	-744.80M	466.72M	588.63M

Chegg Technical Analysis

• Technical Analysis Sentiment: Negative
• Last Price: 1.35
• 50DMA: Negative
• 100DMA: Negative
• 200DMA: Negative
• MACD: Negative
• RSI: Neutral
• STOCH: Neutral

Evaluating momentum and price trends is crucial in stock analysis to make informed investment decisions. For CHGG, the sentiment is Negative. The current price of 1.35 is above the 20-day moving average (MA) of 0.93, above the 50-day MA of 1.09, and above the 200-day MA of 1.12, indicating a bearish trend. The MACD of -0.05 indicates Negative momentum. The RSI at 45.48 is Neutral, neither overbought nor oversold. The STOCH value of 38.33 is Neutral, not indicating any strong overbought or oversold conditions. Overall, these indicators collectively point to a Negative sentiment for CHGG.

Chegg Peers Comparison

Name	Overall Rating	Market Cap	P/E Ratio	ROE	Dividend Yield	Revenue Growth	EPS Growth
AFYA	79 Outperform	$1.32B	10.31	15.51%	<0.01%	3.48%	12.63%
COUR	64 Neutral	$1.34B	-27.59	-7.43%	―	8.10%	43.35%
UDMY	64 Neutral	$768.48M	-196.64	-1.78%	―	2.53%	95.79%
Sector *	62 Neutral	$20.33B	14.63	-3.31%	3.23%	1.93%	-12.26%
LINC	53 Neutral	$696.36M	50.42	7.94%	―	16.90%	41.11%
CHGG	47 Neutral	$100.53M	-1.22	-46.37%	―	-32.37%	90.99%
DAO	46 Neutral	$1.08B	53.88	―	―	-1.51%	155.73%

Chegg Corporate Events

Chegg Announces Major Workforce Reduction and Restructuring

On October 27, 2025, Chegg announced a significant restructuring plan, which includes reducing its global workforce by approximately 45%, impacting around 388 employees. This move aims to align the company’s cost structure with its newly announced strategic focus on standalone operations. The restructuring is expected to incur charges between $15 million and $19 million, primarily for employee transition and severance, with most costs anticipated by the first quarter of 2026. The company’s board also concluded its review of strategic alternatives and announced updates to its standalone operations strategy.