Core Insights - Chegg, Inc. is facing challenges in the higher education sector due to enrollment volatility, increased competition from AI-driven platforms, and changing student preferences, leading to a significant decline in revenues [1][8] - The company is implementing cost-cutting measures to improve operational efficiency, resulting in a substantial reduction in operating expenses [2][8] - Chegg's focus on optimizing its subscription model and leveraging automation is aimed at enhancing margins, although concerns about user engagement and subscriber retention persist [3] Financial Performance - In the first half of 2025, Chegg's net revenues decreased by 32.9% year over year to $226.5 million, with Subscription Services revenues falling by 34% to $197.3 million [1][8] - Total operating expenses were reduced by 72% year over year to $202.5 million due to restructuring efforts, with expected adjusted savings of $165 million to $175 million for 2025 and an additional $100 million to $110 million in 2026 [2][8] Market Competition - Chegg operates in a competitive landscape with key players like Duolingo and Stride, which present overlapping challenges in the edtech ecosystem [4] - Duolingo leads in the language-learning niche with a strong mobile presence, while Stride focuses on K-12 online education, although its AI-enabled services have become less prominent [5][6] Stock Performance and Valuation - Chegg's stock has increased by 166.5% over the past six months, outperforming the Zacks Internet - Software industry and the S&P 500 Index [7] - The stock is currently trading at a forward 12-month price-to-sales (P/S) ratio of 0.38, indicating a discounted valuation compared to industry peers, which may present an attractive entry point for investors [9] Earnings Estimates - The Zacks Consensus Estimate for Chegg's loss in 2025 is projected at 11 cents per share, with breakeven earnings expected in 2026, showing a significant year-over-year downtrend for 2025 but a potential 100% growth for 2026 [10][11]