Jeremy Raper
Long/short equity, deep value, special situations, growth at reasonable price

Chegg: Fleshing Out The Short Thesis

A couple of excellent Seeking Alpha articles (here and here) inspired me to do a bit of deeper digging into Chegg (NYSE:CHGG), the textbook rental company (and aspiring online student education hub). I don't want to go over too much ground already covered in those articles, but to summarize: CHGG is burning vast amounts of cash to maintain a low-margin print textbook rental service that they hope will win students to their online platform for higher-margin, value-added services. The key points for the short case, which I will explore, are: - the print textbook business, always low margin, is rapidly deteriorating further due to intense price competition; - the growing digital business, meant to be much...

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