The stock of Chegg has plummeted as the company became the largest victim of artificial intelligence. CHGG stock has fallen by more than 80% in the past year, and almost 100% since its high point of $115. The market capitalization of CHGG has fallen from $115 million in 2020 to just $116 millions today.
Stocks and shares of Chegg
Chegg, a popular company in the edtech sector that has helped millions of Americans learn to read and write English is one example. The company uses the expertise and experience of teachers and modern technologies such as artificial intelligence in order to simplify learning.
Chegg provides its subscription services, including Chegg Study Pack (study pack), Chegg Study (study), Chegg Writing, Chegg Math and Busuu.
However, the company has been a victim of the AI boom because it is unable to compete with the sophisticated models of firms such as ChatGPT and Claude. Subscriptions fell by about 6%, to a total of 8.1 millions.
ChatGPT is a powerful tool that teaches complex topics like software engineering, mathematics and medicine.
Recent financial results show that revenue fell by 10 percent in the third quarter, to $163.1 millions.
The company’s subscription revenue fell by 11 percent to $146 millions, and its gross margin dropped to 72%. The company’s business model has changed from one that was highly profitable to one where it is now losing money.
In 2023, the company’s profit dropped from $266 to $6.6 million. The company then suffered a loss of $626 in the previous twelve months.
CHGG Earnings ahead
Earnings scheduled for Tuesday will likely be the next catalyst to drive up Chegg’s stock. The company is expecting its revenue to be between $133 and $135 millions in the last set of financial results.
The subscription revenue of the company is estimated to range between $116 and $118 millions, and its gross margin between 67% and 68 percent. Analysts expect its revenue to be $134million. Analysts expect the company’s revenue to drop by 11,7% this year to $632 millions, and then by 6.7% again in 2025, to $589,000,000.
Artificial intelligence is likely to continue to exert pressure on the company’s business growth. The management used several methods to try and turn the business around.
It has also worked hard to improve its artificial intelligence strategy by using its massive amount of data. The company has promoted itself as being at the crossroads of AI and real life, thanks to its teachers.
Chegg also aimed to increase its productivity by cutting about 23% from its worldwide workforce. The company expects to save between $40 and $50 million by implementing these measures in the next fiscal year.
Chegg also aims to be a significant player on the untapped international market.
Chegg share price analysis
Analysts think that CHGG’s stock price will rise more after its recent crash. Stock estimates are $2.96 on average, about 75% higher than the current price.
The daily chart shows that Chegg’s share price is below both the 50-day and 100-day moving averages.
The MACD and Relative Strength Index both point upwards, forming a divergence bullish sign.
Investors will likely buy up the shares at the current low price. The key level to monitor is $3.
A drop below $1.50, the low for the entire year to date will indicate further downside. This would invalidate any bullish views.
The post Chegg Stock Price Outlook: Could CHGG Surge 75% after Earnings? This post may change as new information unfolds
