Why Chegg (CHGG) Shares Are Getting Hammered

Chegg Inc CHGG shares are trading lower by 21.11% to $16.59 Tuesday morning after the company issued weak first-quarter and FY23 guidance.

What Happened?

Chegg reported quarterly earnings of 40 cents per share which beat the analyst consensus estimate of 38 cents. The company also reported quarterly sales of $205.20 million which beat the analyst consensus estimate of $202.06 million by 1.6%.

This is a 1.1% decrease over sales of $207.47 million in the same period last year.

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Chegg sees first-quarter total net revenues in the range of $184 million to $186 million, versus the analyst consensus estimate of $199.85 million. Chegg also sees FY23 total net revenue in the range of $745 million to $760 million, versus the analyst consensus estimate of $817.49 million.

What Else? "The last several years have been very challenging for everyone; however, the best, most innovative companies, like Chegg, come out of difficult times and are able to improve their market position," said Dan Rosensweig, CEO and president of Chegg.

"We are very excited about the next chapter for Chegg; we believe there is significant growth ahead for our business and are energized by the scale of the opportunity in front of us," Rosensweig stated.

Analyst Rating Updates

Additionally, Chegg received a number of analyst rating updates Tuesday including:

• Piper Sandler analyst Arvind Ramnani maintained with a Neutral and lowered the price target from $24 to $17.
• JP Morgan analyst Doug Anmuth maintained with a Neutral and lowered the price target from $23 to $19.
• Morgan Stanley analyst Josh Baer maintained with a Equal-Weight and lowered the price target from $31 to $18.
• Northland Capital Markets analyst Mike Grondahl maintained with a Outperform and lowered the price target from $35 to $24.
• Barrington Research analyst Alexander Paris maintained with a Outperform and lowered the price target from $30 to $22.

According to data from Benzinga Pro, CHGG has a 52-week high of $37.64 and a 52-week low of $15.66.