Shares of Chegg (NYSE:CHGG) spiked more than 23% in Monday’s after-hours trading after the education tech company announced that it would be cutting 23% of its global workforce – roughly 441 employees. This decision is part of a broader restructuring plan aimed at streamlining operations and saving costs.
In fact, due to these layoffs, the closure of two international offices, and other cost-cutting measures, the company anticipates saving between $40 million and $50 million in non-GAAP expenses by 2025.
However, the restructuring isn’t without its costs. Chegg expects to incur between $10 million to $14 million in related charges, with about half of these expenses hitting in the second quarter and the rest being accounted for by the end of 2024.
This move comes after Chegg reported a decrease in subscriptions in the latest quarter and projected a further 5% drop in subscription revenue for Q2, despite the company’s push towards AI-enabled learning. Nevertheless, Chegg reiterated its previous Q2 revenue guidance and expects to bring in $159 million to $161 million.
Is CHGG a Good Investment?
Turning to Wall Street, analysts have a Moderate Sell consensus rating on CHGG stock based on one Buy, six Holds, and four Sells assigned in the past three months, as indicated by the graphic below. After a 73% loss in its share price over the past year, the average CHGG price target of $7.69 per share implies 194.64% upside potential.
