Can Chegg Turn Its Skilling Pivot Into a True 2026 Comeback?

Core Insights - Chegg, Inc. has redefined its business model with the introduction of Chegg Skilling, integrating Busuu and Chegg Skills to tap into the growing global skilling market, estimated at over $40 billion [1] Business Model and Growth Strategy - Chegg Skilling focuses on AI skills and upskilling for frontline workers, with both Busuu and Chegg Skills showing double-digit growth. The segment is projected to achieve $70 million in annual revenues by 2025, with a year-over-year growth rate of 14% [2] - The company is enhancing its B2B focus through successful partnerships, such as with Guild, to secure contracts from employers seeking scalable training solutions, with plans for expansion into Latin America [2] Financial Restructuring - Chegg is implementing a significant cost restructure, aiming to reduce non-GAAP expenses from $536 million in 2024 to under $250 million by 2026, alongside a 60% cut in capital expenditures next year [3] - Improved operational discipline has led to better-than-expected adjusted EBITDA results in Q3 2025, indicating that the new leaner model is starting to yield positive outcomes [3] Market Position and Competition - Chegg operates in a competitive ed-tech landscape alongside Duolingo and Udemy, each employing different strategies to capture market share [5][7] - Duolingo excels in language learning with a gamified app, while Udemy leverages a vast marketplace model with independent instructors to meet evolving professional learning needs [6] Stock Performance and Valuation - Chegg's stock has declined by 22.6% over the past month, underperforming compared to the Zacks Internet - Software industry and the S&P 500 Index [8] - The stock is currently trading at a forward 12-month price-to-sales (P/S) ratio of 0.35, indicating a discounted valuation compared to industry peers, which may present an attractive entry point for investors [11] Earnings Estimates - The Zacks Consensus Estimate for Chegg's 2025 loss has widened to 14 cents, while estimates for 2026 earnings have increased to 18 cents, reflecting a year-over-year decline of 118.7% for 2025 and a projected growth of 228.6% for 2026 [13][14]