Chegg Learning to Adapt to Post-Pandemic Hype

Throughout 2020, many companies that had already been poised to capture large online audiences saw their valuations soar. As the vaccine rollout got underway in the U.S. around February 2021, firms like Chegg, Inc. (CHGG) had to face reality. The direct-to-student learning platform saw its market cap collapse over 70% since its late-February 2021 peak.

Now, though, hovering at around $30.00, Chegg appears to have found its floor after all of its stock volatility.

Delivering his neutral take on the matter is Ryan MacDonald of Needham & Co., who elaborated on several new initiatives and product offerings in which Chegg has been investing its capital. Platforms like Learn with Chegg are anticipated to better entrench the firm with its users, by way of leveraging 10 years of collected data to offer a customized student experience.  

MacDonald rated the stock a Hold, although he did not provide a price target.  

By offering a unique experience for its users, Chegg is expected to increase engagement levels. MacDonald noted that “this new functionality also provides content curation with AI-based suggestions that aims to create a stickier and less transactional relationship with the student.” 

The five-starred financial analyst admitted that Chegg has yet to monetize the new functionality, Learn with Chegg. Of course, if it were to later be capitalized on in that way, it could provide a tailwind to the discounted ed-tech stock.  

Other investments discussed included Chegg University, as well as CHGG’s expanding international reach. The company currently maintains about 1 million international subscribers, although has plans in the works for far more.  

In regard to mergers and acquisitions, Chegg is expected to close its takeover of language learning platform Busuu within the month. CHGG will be focused on acquiring more domestic users for Busuu, and over the long-term, “could generate an attractive cross-sell opportunity.”  

Wall Street’s Take

On TipRanks, CHGG’s analyst rating consensus is a Moderate Buy, based on 5 Buy and 8 Hold ratings. The average Chegg price target is $47.82, reflecting a possible 12-month upside of about 59.72%. By 9:55am EST on Thursday, CHGG was trading at about $29.85 per share.  

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