What Happened?
Shares of online study and academic help platform Chegg (NYSE:CHGG) fell 10.7% in the afternoon session after the company reported disappointing fourth-quarter 2025 financial results and issued weak guidance for the first quarter of 2026. The online learning company's total net revenues fell by 49% year-over-year to $72.7 million, and it posted a net loss of $32.8 million for the quarter. Another key financial measure, adjusted EBITDA, also saw a sharp downturn to $12.9 million from about $37 million in the same period a year ago. Looking ahead, the company's forecast for the first quarter of 2026 projected total revenue between $60 million and $62 million. This outlook was not only below analyst estimates but also represented a significant drop from the $121.4 million reported in the first quarter of the previous year. The quarterly results were also pressured by restructuring costs and continued traffic headwinds from changes in search interfaces.
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What Is The Market Telling Us
Chegg’s shares are extremely volatile and have had 98 moves greater than 5% over the last year. But moves this big are rare even for Chegg and indicate this news significantly impacted the market’s perception of the business.
The previous big move we wrote about was 22 days ago when the stock dropped 9.9% on the news that the U.S. announced potential tariffs on several European countries. The sell-off was a reaction to news that the White House planned to impose a 10% tariff on imports from eight European nations, including France, Germany, and the United Kingdom, starting February 1. Reports indicated the tariffs were intended to pressure Denmark over the potential sale of Greenland to the U.S. and could rise to 25% if a deal was not reached. The announcement caused a significant downturn in U.S. stocks, with the S&P 500 and Dow Jones falling more than 1.4% as investors returned from a holiday weekend and reacted to the heightened trade uncertainty. The downturn was further exacerbated by a spike in Treasury yields. Higher rates particularly hurt growth stocks such as tech names since investors must discount financials further out in the future back to the present.
Chegg is down 38.2% since the beginning of the year, and at $0.61 per share, it is trading 67.1% below its 52-week high of $1.84 from September 2025. Investors who bought $1,000 worth of Chegg’s shares 5 years ago would now be looking at an investment worth $5.70.
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