What Happened:
Shares of online study and academic help platform Chegg (NYSE:CHGG) fell 22.9% in the afternoon session after the company reported first quarter revenue that narrowly beat analyst's revenue estimates. EPS also beat. However the number of subscribers fell by 5.5% year on year, and revenue guidance for the next quarter came in below Consensus. Perhaps more importantly, full year guidance, given last quarter, was pulled. Management noted that beginning in March, it saw a significant spike in student interest in ChatGPT, with the AI technology impacting new customer growth. As we advance, Chegg may face an upsurge in competition from conversational AI platforms like ChatGPT, particularly for certain products in its lineup, including Chegg Study, which permits students to digitally ask questions and receive expert explanations, and Chegg Writing, which provides services such as expert writing feedback.
What is the market telling us:
Chegg's shares are a little volatile and over the last year have had 37 moves greater than 5%. Moves this big are very rare for Chegg and that is indicating to us that this news had a significant impact on the market's perception of the business.
Chegg is down 63.3% since the beginning of the year, and at $9.28 per share it is trading 68.9% below its 52-week high of $29.84 from November 2022. Investors who bought $1,000 worth of Chegg's shares 5 years ago would now be looking at an investment worth $409.49.
Is now the time to buy Chegg? Access our full analysis of the earnings results here, it's free.