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.
|FREE||SA PRO MEMBERS|
|IDEA GENERATOR||X||Exclusive access to 10 PRO ideas every day|
|INVESTING IDEAS LIBRARY||X||Exclusive access to PRO library of more than 15,000 ideas|
|SECTOR EXPERT NETWORK||X||Exclusive access to all sector experts for direct consultation|
|PERFORMANCE TRACKING||X||Track performance of all PRO stock ideas|
|PROFESSIONAL TOOLS||X||Professional Idea Filters to zero-in based on industry, market cap and more|