Howie Man
Long/short equity

Chegg Will Soon Be In Amazon's Rear-View Mirror

Chegg (NYSE:CHGG) is a cash burning machine ($100M of cash consumed since the November IPO) that is facing intensifying competition from the #1 and #2 online retailers (Amazon and Staples) in an already brutal industry. Despite deteriorating fundamentals, the stock has experienced a 50% run over the last month. CHGG has a market capitalization of $700M with $94M of net cash (at March 31) that is disappearing quickly (down to below $50M adjusting for the recent acquisitions). The company trades at 2.2x revenue with negative adjusted EBITDA, no earnings and -$46M LTM FCF. Now, perhaps more than ever, is an attractive point to short the stock. The expected potential return is 60-75% this year.


    Q2 earnings miss...
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