Chegg(US:CHGG) ZACKS·2025-09-02 16:51Core Insights - Chegg, Inc. (CHGG) shares have increased by 14% over the past three months, outperforming the Zacks Internet - Software industry, the Zacks Computer and Technology sector, and the S&P 500 index [1][7] - The stock is currently trading at $1.41, with a 52-week high-low range of $0.44 to $2.43 per share [1] Strategic Business Efforts - Chegg is revamping its Chegg Study service into a Personalized Learning Assistant using AI, aiming to enhance student graduation rates through improved learning processes [4] - The company plans to launch two new core capabilities for Chegg Study by September 2025, further enhancing its offerings [4] - Investments in Busuu and Chegg Skills are contributing to growth in language learning and workplace readiness, with Busuu's revenues growing by 15% year-over-year in Q2 2025 [5] Expense Optimization Efforts - Chegg has reduced total operating expenses by 72% year-over-year to $202.5 million in the first half of 2025, driven by cuts in research and development, sales and marketing, and general and administrative expenses [8] - The company expects adjusted expense savings of $165 million to $175 million for 2025, with an additional $100 million to $110 million in 2026 [9] Sufficient Liquidity Position - As of June 30, 2025, Chegg had cash and cash equivalents of $114.1 million and no long-term debt, with current maturities reduced to $62.5 million from $358.6 million at the end of 2024 [10] - Net cash provided by operating activities was $19.7 million in the first half of 2025, down from $67.5 million in the same period the previous year [11] Market Competition Position - Chegg operates in a competitive landscape with players like Coursera, Duolingo, and Stride, each targeting different segments of the edtech market [12][13] - Chegg's competitive advantage lies in its subscription-based ecosystem that integrates study help, textbooks, and AI-enabled support, making it a comprehensive platform for students [15] Earnings Estimate Revision - Estimates for 2025 indicate a loss per share of $0.11, while 2026 estimates suggest a break-even point [16] - The estimated figures for 2025 reflect a downtrend of 114.7% year-over-year, while estimates for 2026 indicate 100% growth [17] Valuation Trend - CHGG stock is trading at a forward 12-month price-to-sales (P/S) ratio of 0.42, indicating a discounted valuation compared to industry peers, suggesting an attractive entry point for investors [18] Investment Outlook - Chegg's strategic initiatives, including the AI-driven transformation of Chegg Study and growth in Busuu, are driving momentum [19] - Despite expected losses in 2025, the trajectory improves towards breakeven in 2026, indicating a potential inflection point in profitability [20] - The combination of ongoing product innovation, cost optimization, and attractive valuation positions the stock for long-term upside [20][22]