HomeMarket NewsSmall CapsWhy Chegg Stock Is Trading Lower Following Third Quarter Results

Why Chegg Stock Is Trading Lower Following Third Quarter Results

Actionable Trade Ideas

always free

books 441866 1920

Chegg Inc (NYSE: CHGG) shares are experiencing a decline in trading on Tuesday after the company released its third-quarter financial results. Let’s take a closer look at the key highlights from the quarter:

  • Q3 Revenue: Chegg reported $157.9 million in revenue, beating estimates of $152.67 million.
  • Q3 EPS: The company posted earnings per share of 18 cents, surpassing estimates of 17 cents.

On a year-over-year basis, revenues declined by 4%, with subscription services revenues also dropping by 4% to $139.9 million. The number of subscription services subscribers decreased by 8% to 4.4 million.

Gross margin was reported at 47%, primarily due to a one-time content and related assets charge. However, adjusted gross margin stood at 74%.

The company announced the rollout of the first phase of its new AI-powered user experience.

According to Dan Rosensweig, the president and CEO of Chegg, β€œChegg is in a great position to build the most impactful, scalable, AI-enabled personal learning assistant, which will expand our opportunities to serve more students, in more ways, and at a lower cost per customer.”

Chegg has already started implementing its new simple user interface and unified asking experience, delivering faster and more relevant solutions to users.

Outlook: For the fourth quarter, Chegg expects revenue in the range of $185 million to $187 million, with subscription services revenues projected to be between $164 million and $166 million. Gross margin is estimated to be between 73% and 74%, with adjusted EBITDA anticipated to be in the range of $62 million to $64 million.

Following the release of the quarterly results, Piper Sandler analyst Arvind Ramnani adjusted his rating on Chegg to Neutral and lowered the price target from $13 to $9.

Check This Out: What’s Going On With Alibaba Stock Tuesday?

CHGG Price Action: At the time of publication, Chegg shares were trading at $8.50, down 4.06%.

Photo: Hermann Traub from Pixabay.

Swing Trading Ideas and Market Commentary

Need some new swing ideas? Get free weekly swing ideas and market commentary from Jonathan Bernstein here: Swing Trading.

Explore More

Weekly In-Depth Market Analysis and Actionable Trade Ideas

Get institutional-level analysis and trade ideas to take your trading to the next level, sign up for free and become apart of the community.