Chegg (CHGG) Stock Forecast & Price Target

Chegg Inc. has demonstrated resilience in its financial performance, with a gross margin contraction of 500 basis points year-over-year to 71.6%, exceeding expectations due to improvements in cost of goods sold efficiencies. The company is on track to achieve significant savings of $100 million to $120 million by 2025 through restructuring efforts, alongside a proactive approach in managing its capital structure by repurchasing convertible notes at a substantial discount. Additionally, Chegg continues to focus on innovation and marketing strategies to enhance brand awareness, indicating a commitment to adapt in a competitive digital study tool market while exploring options to maximize shareholder value.

Chegg Inc. has experienced a significant decline in subscribers, dropping from 4.6 million in 4Q23 to 3.6 million in 3Q24, as a result of ongoing industry pressures and increased competition, marking a 21.3% year-over-year decrease. Although subscription revenue exceeded estimates by nearly $1.5 million, overall revenue still fell by 23.7% year-over-year, primarily due to a 22.7% decline in Subscription Services revenue and a notable 31.1% drop in Skills and Other revenue. Additionally, the company's adjusted EBITDA significantly missed consensus expectations, falling to a range of $13 million to $14 million, reflecting considerable margin compression of approximately 1,300 basis points.