Shares of Chegg Surge After Announcing Restructuring

Chegg (NYSE:CHGG) is a California-based company that operates a direct-to-student learning platform that helps learners build essential life and job skills to accelerate their path from learning programs in the United States and internationally. Its shares were up 20% in after-hours trade late on Monday, June 17, 2024. The stock is still down 76% in the year-to-date period.

Shares of Chegg gained momentum in after-hours trading in the wake of the company’s announcement that it will move forward with a significant restructuring plan. The restructuring plan will see the exit of 441 employees, which represents 23% of the company’s workforce.

“Today, we executed a restructuring effort,” said Nathan Schultz, President and CEO of Chegg. “[This is] a major step in my plans to refocus Chegg and return to subscriber and revenue growth. These changes are designed to make us a more focused, more efficient, uncomplicated, and quicker-moving company. Our renewed focus on our core audience – the student – will allow us to address an unmet need with an offering that is differentiated, holistic, and verticalized for education.”

By 2025, Chegg estimates that it will realize non-GAAP expense savings of $40 million to $50 million due to the savings from the restructuring. In the first quarter (Q1) of fiscal 2024, the company reported revenues of $174 million – down 7% year over year. Moreover, subscription services revenue dropped 9% to $154 million.

Chegg stock currently possesses a price-to-earnings ratio of 33, which puts the education tech stock in solid value territory compared to its industry peers at the time of this writing.