Chegg Inc (CHGG)

Chegg Inc Stock (CHGG) dropped by 6.21% from $10.46 to $9.81 in the trading on Monday November 20, 2023. The reasons why CHGG stock down today is due to the stock downgrade from the analyst. Morgan Stanley analyst Josh Baer downgraded the stock to Underweight from Equal-Weight and lowered the target price of the stock from $10 to $9 per share. It is due to several headwinds that Chegg is facing:

• Sequential subscriber trends have worsened each quarter in 2023 compared to pre-COVID average seasonality.
• The full impact of increased competition from GenAI is still to come as more Chegg loyalists graduate.
• There is a risk that ARPU could turn from a tailwind to a headwind.

Shares of Chegg, Inc. (CHGG) dropped by 15.11% from $8.87 to $7.53 in the trading on Tuesday, October 31, 2023. The reason why CHGG down is due to the release of Chegg's third-quarter earnings report and mounting concerns about competition from the AI chatbot ChatGPT, which have been exerting downward pressure on the company's stock.

• Earnings Report Overview: Chegg managed to surpass headline estimates for the quarter, yet its overall performance remained lackluster. Revenue, at $157.9 million, dropped by 4%, surpassing the consensus estimate of $152.7 million. However, notable metrics painted a less favorable picture: adjusted gross margin slid from 76% to 74%, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA) decreased from $50 million to $38.8 million, and adjusted earnings per share dipped from $0.21 to $0.18. Moreover, the number of subscribers to Chegg's services dwindled by 8% to 4.4 million, reflecting ongoing challenges.
• AI Competition Concerns: CEO Dan Rosenzweig acknowledged the growing impact of AI, particularly ChatGPT, on student usage. Nevertheless, he emphasized Chegg's specialized focus on learning, noting that in comparisons with more general AI solutions, Chegg consistently outperforms them. The confluence of these financial performance figures and rising concerns about AI competition weighed heavily on Chegg's stock price, prompting the notable decline.