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Chegg: E-Learning With 67% Subscriber Growth - And Cheap

Dec. 02, 2021 1:59 PM ETChegg, Inc. (CHGG)8 Comments
Hohaf Investments profile picture
Hohaf Investments
258 Followers

Summary

  • Chegg, Inc. offers a significant amount of tools for students including books, exam preparations, math solver tools, citations, grammar checkers, and textbook solutions.
  • Chegg has been very successful among college students, who recognize the platform even before other e-learning tools offered by Amazon or Google.
  • The number of subscribers is obviously increasing at a large pace. We are talking about around 67% y/y growth in 2020.
  • In my opinion, the company is doing something extremely revolutionary. In some way, platform designers are trying to offer personalized solutions, which will most likely bring new subscribers.
  • I would expect a market capitalization of $3.73 billion in 2021, and $7.7 billion in 2031. If we sum the free cash flow, assume cash of $1.7 billion and debt of $1.6 billion, the net present value would stand at $18.5 billion.

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This article was written by

Hohaf Investments profile picture
258 Followers
With seven years working inside a financial institution in Europe, I love growth investments. I will never sell my DCF models. My content is intended to be used and must be used for information and education purposes only. It is very important to do your own analysis before making any investment based on your own personal circumstances. You should take independent financial advice from a professional in connection with, or independently research and verify, any information that you find on my articles and wish to rely upon, whether for the purpose of making an investment decision or otherwise.I am not a broker/dealer, I am not an investment advisor.

Analyst’s Disclosure: I/we have a beneficial long position in the shares of CHGG either through stock ownership, options, or other derivatives. I wrote this article myself, and it expresses my own opinions. I am not receiving compensation for it (other than from Seeking Alpha). I have no business relationship with any company whose stock is mentioned in this article.

Seeking Alpha's Disclosure: Past performance is no guarantee of future results. No recommendation or advice is being given as to whether any investment is suitable for a particular investor. Any views or opinions expressed above may not reflect those of Seeking Alpha as a whole. Seeking Alpha is not a licensed securities dealer, broker or US investment adviser or investment bank. Our analysts are third party authors that include both professional investors and individual investors who may not be licensed or certified by any institute or regulatory body.

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Comments (8)

u
@Hohaf Investments Are you taking into account at all the shutdowns of 2020 that required most students to distance learn? And are you taking into account the fact that colleges are now checking work against what is available from Chegg- "In reality, most professors can see if you used Chegg to get answers. They know this by comparing your answers with those publicly available on Chegg for similarity. If you copy a wrong answer from Chegg and it matches on a plagiarism scan, then your professor will know and might report you for cheating." I'm not sure about either the growth trajectory once covid recedes, and colleges becoming more adept at screening out cheating [and I'm not accusing every Chegg user of cheating by any means].
Stonk Slayd Capital Management profile picture
@usera2020 are you sure professors will do this actively. otherwise im screwed.
Retired @ Heart profile picture
I prefer KHOTF for my EdTech play.
Stonk Slayd Capital Management profile picture
@Retired @ Heart dude first of all i didn't even know that Kahoot has stock. #2, this is way overvalued.
Stonk Slayd Capital Management profile picture
@Retired @ Heart and it's just a website, nothing else. not nearly worth this insane price.
k
CEO is clueless like a kindergartener send to college without Chgg. He needs to set favorable ASR target. If he sets a target of $34 then he can drive 50% shorts and stock can go to fair value of $38-40
z
Is it realistic to assume your revenue growth models? It seems like shutdowns will be a thing of the past. They had a spike in revenue growth with the pandemic but deceleration during past few quarters. I can see a continued market for online college credits like study.com, functioning more like a community college.
Stephen Tobin profile picture
@zzstock123 I agree, this article lacks balance. It is overly positive.
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