One-glance verdict
Undervalued
$15.03 our estimate vs market $0.67
Wall Street consensus: $2.79 (-81.4% lower than our fair-value estimate)
96% below our estimate, below the bear case
Fundamentals snapshot
Chegg, Inc.
CHGG · NYQ · Consumer Defensive · Education & Training Services
Current price
$0.67
52-week range
$0.45 - $1.56
Market cap
$74.43M
Balance sheet
Healthy
-194.67x Concerning
Net cash $21.59M. Interest coverage shows how many times profit covers the interest bill.
What stands out
1 Reward
3 Risks
1 rewards · 3 risks
- Reward Free cash flow was positive in 8/10 years.
- Risk Return on equity was -38.3% last year — the company lost money on shareholders' equity.
- Risk Operating margin compressed from 1.2% to -6.1% over 3 years.
- Risk Insider ownership is only 3.5% (peer median: 7.1%).
What this company does
Chegg, Inc.
Chegg provides online learning tools like AI-powered homework help and writing assistance to students and companies looking to upskill employees. Its main money comes from subscriptions to these services, which is important because reliable subscriptions mean the company has a steady income stream.
How the company got here
Chegg started in 2005 as a textbook rental company for college students, founded by Iowa State University students who saw an opportunity to make textbooks more affordable. The company went public in 2013, and over time, it expanded its offerings beyond just textbook rentals to include a wider range of digital learning services. Chegg's journey has been marked by a significant shift from physical products to digital solutions, adapting to the changing needs of students and the education landscape. Recently, the company has been navigating challenges, including increased competition from AI tools, leading to a strategic refocusing of its business.
What it actually does
Chegg operates a learning platform designed to help students succeed in their academic and career pursuits. It offers a variety of services aimed at making education more accessible and manageable. These services include tools for homework help, writing assistance, and textbook rentals, all accessible through a subscription model. The company's goal is to provide students with the resources they need to learn more effectively and efficiently, ultimately improving their educational outcomes.
Chegg Study Pack
Chegg Study Pack is a bundled subscription service that offers a suite of Chegg's core academic support tools. This includes access to Chegg Study, which provides step-by-step solutions to textbook problems and expert answers to student questions, and Chegg Writing, which offers tools like plagiarism detection and grammar checking. It also often includes Chegg Math, a tool to help solve math problems. This segment is a significant part of Chegg's revenue, as it provides a comprehensive package of academic assistance to students for a recurring fee.
Chegg Study
Chegg Study is a primary subscription service that offers direct academic support to students. It provides access to a vast database of step-by-step solutions for textbook problems, allowing students to understand how to solve challenging questions. Additionally, students can ask subject-matter experts specific questions and receive detailed answers, helping them grasp difficult concepts. This service is a cornerstone of Chegg's offerings, directly addressing students' needs for homework and study assistance.
Chegg Writing
Chegg Writing is a subscription-based service focused on improving students' writing skills. It equips students with a suite of tools designed to help them produce better academic papers. These tools include plagiarism detection to ensure originality, grammar and fluency checkers to refine their writing, and expert feedback for personalized improvement. It also offers premium citation generation, which helps students properly format their sources according to various academic styles, a crucial aspect of academic integrity.
Chegg Math
Chegg Math is a specialized service designed to assist students with mathematics. It functions as a computational engine and problem-solver, helping students to understand and solve a wide range of math problems. By providing step-by-step explanations, it aims to demystify complex mathematical concepts and guide students through the problem-solving process. This service is particularly valuable for students in subjects like algebra, calculus, and statistics.
Chegg Skills
Chegg Skills represents a newer, strategic focus for the company, aimed at helping individuals acquire in-demand technical skills for the modern workforce. This segment offers learning opportunities in areas such as AI, coding, data analytics, and cybersecurity. The goal is to equip lifelong learners and businesses with the skills needed to succeed in evolving job markets. This business line is positioned as a growth engine for Chegg, targeting the broader professional development and upskilling market.
Textbook Rentals and Sales
This segment involves the traditional business of renting and selling both print and digital textbooks. Chegg provides students with access to required course materials at a lower cost than purchasing new. While the company has increasingly focused on its digital subscription services, textbook rentals and sales remain a part of its business, offering a more tangible product alongside its digital learning tools.
What management is betting on now
Chegg's current strategy is centered on reinventing the company around the growing 'skilling' market, which focuses on equipping individuals with in-demand technical abilities for the job market. Management sees this as a significant opportunity for double-digit growth and strong profitability. The company is organizing itself into two main parts: Chegg Skilling as the growth engine, and its established Academic Services to generate cash flow. This strategic shift aims to position Chegg for future success by adapting to the evolving needs of learners and employers in a rapidly changing economy.
AI Model Training Services
Leveraging its extensive data and network of subject matter experts, Chegg is expanding into providing services for training and evaluating AI models. This involves using its expertise in managing expert-generated content to help organizations develop more accurate and reliable AI systems, particularly in STEM fields. This new venture aims to capitalize on the growing demand for high-quality data and human feedback in AI development, positioning Chegg as a key player in the AI ecosystem.
Price history
How the share price has moved
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Earnings history
Last 8 quarters — what happened
Click any quarter to read the call summary and what the numbers say.
FY2024 Q3
$23.69M
FY2024 Q4
$4.83M
FY2025 Q1
$15.86M
FY2025 Q2
$-12.07M
FY2025 Q3
$-943.00K
FY2025 Q4
$-15.48M
FY2026 Q1
$3.06M
FY2026 Q2
$6.40M
Revenue
$51.85M
Net income
$-2.95M
Diluted EPS
-0.03
Operating cash flow
$10.06M
Free cash flow
$6.40M
Fetching…
Sources
Revenue
$63.26M
Net income
$228.00K
Diluted EPS
0.00
Operating cash flow
$4.11M
Free cash flow
$3.06M
Fetching…
Sources
Revenue
$72.66M
Net income
$-32.80M
Diluted EPS
-0.30
Operating cash flow
$-9.01M
Free cash flow
$-15.48M
Fetching…
Sources
Revenue
$77.74M
Net income
$-17.47M
Diluted EPS
-0.16
Operating cash flow
$4.81M
Free cash flow
$-943.00K
Fetching…
Sources
Revenue
$105.12M
Net income
$-35.66M
Diluted EPS
-0.33
Operating cash flow
$-4.84M
Free cash flow
$-12.07M
Fetching…
Sources
Revenue
$121.39M
Net income
$-17.48M
Diluted EPS
-0.17
Operating cash flow
$24.53M
Free cash flow
$15.86M
Fetching…
Sources
Revenue
$143.48M
Net income
$-6.12M
Diluted EPS
-0.03
Operating cash flow
$18.13M
Free cash flow
$4.83M
Fetching…
Sources
Revenue
$136.59M
Net income
$-212.64M
Diluted EPS
-2.05
Operating cash flow
$39.53M
Free cash flow
$23.69M
Fetching…
Sources
Is it cheap or expensive?
Fair value $15.03 vs current price $0.67
Wall Street consensus is the average analyst price target: $2.79 (-81.4% lower than our fair-value estimate).
Our most-likely fair value is $15.03 a share — about 2,142.0% above today's price of $0.67, so the stock currently looks cheap (undervalued).
Is it drowning in debt?
Healthy
Net cash $21.6M - more cash than debt. Interest coverage -194.7x.
Net debt
$-21.59M
Interest coverage
-194.67x
Chegg, Inc.'s profit covers its interest bill about 0.0 times over. which is weaker than most peers shown here and 1 peers sit below 1x, which is the danger zone where profit does not fully cover the interest bill.
Healthy
Worse cushion
Baseline
Better cushion
CHGG
BASELINE
Chegg, Inc.
Total debt $50.72M Interest coverage -194.67x This is the baseline the peer rows are being compared against.
Total debt $574.57M Interest coverage -0.67x Neither company has much profit cushion over interest right now.
Total debt $273.21M Interest coverage 3.56x This peer still has a real interest-payment cushion, while CHGG does not.
What you should know
The case for and against CHGG
1 Reward
3 Risks
Rewards
-
Free cash flow was positive in 8/10 years.
Risks
-
Return on equity was -38.3% last year — the company lost money on shareholders' equity.
-
Operating margin compressed from 1.2% to -6.1% over 3 years.
-
Insider ownership is only 3.5% (peer median: 7.1%).
The numbers
All the key metrics, grouped by purpose
Tap any ? icon to learn what it means.
Valuation
How expensive the stock looks
P/E (TTM)
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Forward P/E
-9.58x
P/B
0.63x
P/S
0.28x
EV/EBITDA
0.69x
PEG ratio
0.13x
Profitability
How much profit each dollar creates
Gross margin
64.8%
Operating margin
-6.1%
Net margin
-20.0%
ROE
-38.3%
ROA
4.7%
Health
Liquidity and balance-sheet strength
Debt / equity
0.43x
Current ratio
1.17x
Quick ratio
0.89x
Total debt
$50.72M
Total cash
$72.31M
Growth
How the business has been compounding
Revenue TTM
$265.51M
Revenue 5Y CAGR
-16.5%
EPS TTM
-0.48
EPS 5Y CAGR
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Cash flow
How much cash the business throws off
Operating CF TTM
$9.96M
Free CF TTM
$-12.63M
FCF margin
-4.8%
Dividend
Shareholder payout
Yield
0.0%
Payout ratio
0.0%
Last ex-div date
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