Chegg (CHGG) Stock Forecast & Price Target

Chegg Inc. demonstrates resilience in its financial performance, having achieved a gross margin of 71.6%, which exceeded expectations due to efficiencies in cost of goods sold, despite a year-over-year contraction of 500 basis points. The company is actively pursuing significant restructuring cost savings of $100 million to $120 million by 2025, along with the successful repurchase of $117 million in convertible notes at a notable discount, strengthening its balance sheet. Furthermore, Chegg is engaged in strategic initiatives aimed at enhancing brand recognition and broadening its content library, indicating a commitment to innovation and competitiveness in a challenging market environment.

Chegg Inc. is experiencing a significant decline in subscribers, dropping to 3.6 million in Q4 from 4.6 million in Q4 of the previous year, reflecting a 21.3% year-over-year decrease amid increasing industry competition. Although subscription revenue slightly surpassed expectations, the overall financial metrics revealed a concerning trend, with total revenue declining by 23.7% year-over-year, partially driven by a notable decrease in Subscription Services revenue and a substantial decline in related skills services. Furthermore, adjusted EBITDA significantly missed consensus estimates, indicating severe margin compression, which raises red flags about the company's operational health and future growth potential.