A few reasons why the CHGG share price could continue to fall in 2021
Chegg, Inc. (NYSE: CHGG) is an American educational technology company headquartered in Santa Clara, California. CHGG offers digital and physical textbook rentals, textbook solutions, online tutoring and other student services. Chegg targets its products at high school and college students.
Last month, on June 2nd, CHGG announced a brand new platform for educators and faculties to share their educational content with millions of users. The content will complement and enhance the company’s existing Chegg Study service, which already delivers 59 million step-by-step solutions. The aim of the new platform is to support users in their studies and to improve learning outcomes.
Chegg stock is up 20% year-over-year and recently rebounded from its lows in early June using its 10-day moving average. The stock is still slightly below its year-to-date break-even, with pressure on the 180-day moving average right above your head, although the stock looks like it might level north or here today. On the last review, CHGG was up 2.7% for the day to $ 46.42.
CHGG has exceeded or met analysts’ earnings expectations in all four of its most recent quarterly earnings reports. For the second quarter of 2020, Chegg beat analyst estimates with a margin of $ 0.05. For the third quarter of 2020, Chegg exceeded expectations by $ 0.07. For the fourth quarter of 2020, CHGG beat estimates with a margin of $ 0.06. Finally, Chegg lived up to expectations with earnings per share (EPS) of $ 0.28 for the first quarter of 2021. Analysts are optimistic that the company will report earnings per share of $ 0.37 in its next earnings report.
Additionally, even after the stock’s recent bearish move, Chegg has a sky-high price-to-earnings ratio of 61.35 and a market cap of $ 11.9 billion. Nonetheless, Chegg has continued to increase its sales in recent years and has increased its sales by almost 180% since the 2017 financial year. Most recently, Chegg increased its last 12-month sales by 10% compared to sales for fiscal year 2020. However, that growth rate is below expectations as the company is still struggling with profitability. Chegg’s 12-month trailing net income is currently around $ -65.7 million, a decrease of nearly $ 60 million from fiscal 2020 and likely a change in the company’s pattern of steady annual net income growth will reflect.
Overall, Chegg stock is still showing positive growth signals, but its valuation may have overtaken the company by a year or two. There is a chance the stock could decline further in the short term, which could be a good buying opportunity for prospective investors.