Chegg Stock : Chegg shares Chegg (CHGG -0.88 0.8%) dropped on Tuesday following the company’s online education platform stated that rising costs were being a major factor in students’ enrollment.
By 12:20 p.m. ET Chegg’s stock was down by more than 30%.
So , what’s next?
Chegg’s revenue grew by two percent over the previous year to $202.2 million during the first quarter, thanks to an increase of 14% in revenue from services. The growth was driven by a 12percent increase the number of Chegg Services subscribers, to 5.4 million. These numbers were helped by the company’s acquisition of the language learning platform Busuu at the beginning of January.
Chegg’s adjusted net profit increased by 8%, to $50.1 million in the amount of $0.32 per share. This was higher than Wall Street’s expectations for adjusted profits per share of $0.24.
What do we do now?
The company, however, Chegg slashed its full-year forecast due to the growing macroeconomic issues that are forcing more people to put “earning over learning,” according the Chegg’s CEO Dan Rosensweig.
“The issues of enrollment, the economy, and now inflation have all impacted our industry,” Rosensweig stated. “Students continue to take fewer classes and those they do take are often less rigorous, with fewer or more limited assignments.”
Chegg is now estimating revenue of $740 million – $770 million, and adjusted earnings before depreciation, interest, taxes and amortization (EBITDA) of $220 million to $235 million by 2022. This is a sharp drop from its previous guidance for earnings of $830 million- $850 million and an adjusted EBITDA in the range of $260 to $270 million.
However, Rosensweig believes Chegg is well-positioned to see a possible recovery in the demand in educational products. “We expect these challenges to be temporary and when they subside, our operating model, balance sheet, and leading brand put us in a strong position to accelerate our growth,” Rosensweig stated.
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At present, the consensus of analysts on Chegg is a moderate Buy, with an estimated price goal of $22.20 which is an 34.79 percent gain. In a recent report, BMO Capital also maintained the stock with a Hold rating. Chegg stock, with an $20.00 Price target.
