2. Chegg, Inc. (NYSE:CHGG)
Number of Hedge Fund Holders: 33
Chegg, Inc. (NYSE:CHGG) provides a direct-to-student learning platform that offers products and services to support students in their academic journey and career development. The company’s Chegg Services include subscription services, such as Chegg Study, Chegg Writing, and Chegg Math, which help students master challenging concepts and solve math problems. The company also offers skills and other services, including advertising, print, and eTextbooks. On February 24, Chegg, Inc. (NYSE:CHGG) entered into an expedited share repurchase agreement to buy back $150 million worth of its own common stock, which is a component of its $2 billion securities repurchase initiative.
On February 7, BMO Capital analyst Jeffrey Silber decreased Chegg, Inc. (NYSE:CHGG)’s target price from $30 to $20 and maintained a Market Perform rating on the shares. Although the company’s Q4 earnings surpassed projections, the analyst believes that the initial 2023 outlook is unsatisfactory due to persisting “macro challenges,” such as decreased higher education enrollment, a robust job market, and inflation. Nonetheless, Chegg, Inc. (NYSE:CHGG) management is optimistic about ending the year in a stronger position than it began, the analyst told investors.
According to Insider Monkey’s fourth quarter database, 33 hedge funds were bullish on Chegg, Inc. (NYSE:CHGG), compared to 28 funds in the prior quarter. D E Shaw is a prominent stakeholder of the company, with 2.5 million shares worth $63.6 million.
Here is what Artisan Mid Cap Fund has to say about Chegg, Inc. (NYSE:CHGG) in its Q4 2021 investor letter:
“Short-term market dynamics aside, we did experience several disappointing profit cycle developments during the quarter, Chegg and Roku in particular. Chegg is a digital education platform. A pattern of steady long-term growth in US subscribers surprisingly came to an end when it reported Q3 results. This precipitated a sharp decline in the company’s valuation and our estimate of its private market value (PMV). Management cited factors such as fewer enrollees in 2-year colleges (lured into the workforce by higher wages) and less need for study aides as COVID-related pressures have resulted in students taking less-challenging courses and professors assigning lighter workloads. We view these explanations as mostly logical, but we also believe US penetration of the company’s services has become relatively mature. These headwinds could persist for at least the next few quarters, and we are currently evaluating whether other long-term growth drivers—international subscriber growth, new services—remain intact. Meanwhile, it represents a very small GardenSM position in our portfolio.”
