Chegg Inc. Experiences Significant Drop in Share Prices Following Revenue Decline

Author: Logan Wright Updated: 02-24-2025 04:51 PM

Chegg Inc. Faces Share Price Decline After Revenue Report

Chegg Inc. (NASDAQ: CHGG) has seen a notable decrease in its stock value following its recent fourth-quarter earnings announcement. This decline has raised concerns among investors and analysts alike.

Analyzing Q4 Earnings Results

For the fourth quarter, Chegg reported earnings of 17 cents per share, which aligned closely with analyst estimates. However, the company's quarterly revenue fell to $143.48 million. This figure was slightly above the consensus estimate of $142.05 million but represented a significant drop from the previous year’s revenue of $187.99 million. Such results highlight the challenges the company is currently facing.

Key Statements from Leadership

During the earnings call, Nathan Schultz, CEO of Chegg, emphasized the company's ongoing strategic adjustments. He mentioned, "We made two important and connected decisions to maximize the future of our business and shareholder value. We are launching a strategic review process and filed a complaint against Google for unfair practices that impacted our traffic. This has had notable repercussions for our customer acquisitions, revenue generation, and workforce."

Schultz added, "As we aim to stabilize Chegg’s business looking towards 2025, we recognize that we have a strong brand, millions of subscribers globally, and exceptional employees. Our educational products are designed with a deep understanding of students’ needs, and I am confident this year can mark a turning point for us."

Revised Outlook for Q1

Chegg's outlook for the first quarter of the upcoming fiscal year suggests revenue will fall between $114 million and $116 million, significantly lower than the analyst expectation of $138.07 million. This disparity may cause further concern among investors regarding the company's immediate future.

Current Market Position and Stock Performance

The after-hours trading session revealed that Chegg shares have dropped approximately 21.79%, closing at $1.22. This decline reflects investor frustration and uncertainty over the company's potential recovery in the coming quarters.

Implications for Shareholders

The ongoing revenue decline and cautious outlook present challenges for Chegg Inc.'s shareholders. As the company undertakes strategic reviews and legal actions, it is crucial for investors to monitor developments that may influence both stock performance and overall business direction.

Frequently Asked Questions

What drove the decline in Chegg's stock price?

The decline in Chegg's stock price was primarily driven by the company's lower-than-expected revenue and conservative guidance for the upcoming quarter, reflecting operational challenges.

How did Chegg perform compared to analysts' expectations?

Chegg's earnings met analysts' expectations, but the revenue fell short in comparison with both expectations and performance from the previous year.

What steps is Chegg taking to address its challenges?

Chegg has launched a strategic review process and has initiated legal action against Google to address competitive disadvantages that have affected its revenue.

What revenue figures are expected for the first quarter?

Chegg expects its first-quarter revenue to be between $114 million and $116 million, falling below analysts' expectations.

What does the future hold for Chegg Inc.?

While Chegg faces significant challenges, its leadership remains optimistic about the company’s strong brand and subscriber base, targeting stabilization by 2025.

About The Author

Dedicated Author and financial expert Logan Wright here, 29 years old. After earning an economics degree, I spent a number of years working in different financial industries. My great passion is enabling everyone, from any background or experience level, to understand and be literate in financial matters.

My books and writings are centered on simplifying difficult financial ideas into doable, understandable guidance. Whether it's retirement planning, investing, or budgeting, I want to arm readers with the information they need to make wise financial choices and realize their financial objectives.

Apart from writing, I also frequently post to financial blogs and organize webinars and workshops targeted at enlightening participants about personal finance. Always, my strategy is to offer concise, doable advice that can truly improve people's lives.

Away from work, I like to read, travel, and sample new foods. My goal is to infuse everything I do with the balance that I think is essential to both financial and personal well-being. By my profession, I want to encourage and enable people to confidently and clearly take charge of their financial futures.

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