Why Chegg Stock Is Up Big Today

Core Insights - Chegg is undergoing significant restructuring to adapt to the challenges posed by the rise of artificial intelligence in the education sector [4][5][6] - The company aims to save between $40 million to $50 million annually through cost-cutting measures and has set ambitious financial targets for 2025, including a 30% adjusted EBITDA margin and $100 million in free cash flow [2][6] - Following the announcement of these changes, Chegg's stock saw a 10% increase, indicating positive investor sentiment towards the new direction under CEO Nathan Schultz [3] Company Actions - Chegg is reducing its global workforce by 23%, equating to approximately 441 jobs, as part of its strategy to focus on tech-enabled tools for students [5][6] - The company is developing customized AI tools to enhance its offerings and drive future subscription growth [1][6] - The restructuring is intended to create a more efficient and focused organization that can better meet the needs of its core audience, students [6] Financial Performance - Chegg's stock has experienced a significant decline of about 75% year-to-date, primarily due to falling earnings and subscriptions [4] - Despite the downturn, the company has remained a cash generator and has utilized its cash for share buybacks [2] - The management's commitment to achieving a 30% adjusted EBITDA margin and $100 million in free cash flow by 2025 reflects a focus on long-term financial health [2]