Chegg (CHGG) Stock Forecast & Price Target

Chegg Inc's positive outlook is supported by its gross margin, which, despite contracting year-over-year, remained higher than expectations at 71.6% due to cost of goods sold efficiencies. The company's strategic focus on international markets with favorable average revenue per user (ARPU) dynamics suggests potential for substantial growth as it expands its services in countries such as Mexico, South Korea, and Canada, thus enhancing its revenue potential. Additionally, Chegg is on track to achieve significant cost savings through restructuring, alongside active measures to enhance brand awareness and student engagement, particularly through innovative marketing strategies on platforms like TikTok and Discord, which could drive new customer acquisition and conversion to paying members.

Chegg Inc has experienced a notable decline in its subscriber base, with numbers dropping to 3.6 million in the most recent quarter, reflecting a 21.3% year-over-year decrease, which raises concerns about the company's ability to maintain growth amidst competitive pressures. Although subscription revenue slightly exceeded expectations, the overall total revenue fell by 23.7% year-over-year, primarily due to significant declines in both Subscription Services and Skills and Other segments. Moreover, the company's non-GAAP operating margin underperformed relative to projections, and adjusted EBITDA estimates showed substantial compression, indicating persistent challenges impacting Chegg's financial performance.