Chegg, Inc (CHGG:NYSE) was founded in 2003 and operates a direct to student learning platform. They offer solutions to allow students to pass tests, pass classes and, maybe most importantly, save money on textbooks. The company is broken down into several segments.
Chegg Study includes “Textbook Solutions” offering step by step solutions on difficult to master topics, “Expert Q&A” where you can post a picture of your question and get an answer in as little as thirty minutes and a database of $21 million homework solutions to search through. This is a subscription based service at $14.95 per month.
Chegg Books allows you to rent or buy textbooks with up to 90% off, 21 day risk free returns and a 4 week free trial of Chegg Study. Chegg Writing offers assistance through services such as Plagiarism Checker, Grammar Checker and Essay Checker. This service cots $9.95 per month. Chegg Tutors offers online tutors ready to help 24/7, whether through a one time session or repeating.
The company has many other services and seemingly offers a support system for just about anyone. The subscription based payment systems offers the kind of revenue reliability that Wall street likes.
The company reported their quarterly results today. Chegg reported 4th Quarter December 2019 earnings of $0.35 per share on revenue of $125.5 million. The consensus earnings estimate was $0.28 per share on revenue of $123.2 million. The stock has run up over 52% from $29.33 in early November to $44.62 at the close going into earnings today. The earnings revenue beat wasn’t impressive enough to keep the stock from selling off a bit after hours. After that kind of run, some profit taking is to be expected.
In my view, Chegg has many of the traits of a successful stock and company. They have a service that is in demand, reasonable pricing, and a feeling of community. They have a predictable, growing revenue stream. My thought is that there isn’t much of a barrier to entry and one must wonder what kind of competition is on the horizon. Either way, it’s a interesting company to keep an eye on.
This article is meant to be for informational purposes. It is written from my personal opinion and from informational sources believed to be accurate. It is not meant to be investment advice, and should not be construed as such. I do not recommend buying or selling any of the stocks discussed. All investments bear risk and your on due diligence should be undertaken to determine which investments are most appropriate for you.