Chegg Stock Dips As Online Education Trade Slows

Text size

Ron Lima / Dreamtime



Chegg

stocks are trading sharply lower late on Monday after the online education company warned that fourth-quarter financial results will be well below Street’s previous expectations as student behavior changes with the reopening of schools. schools after Covid-related closures last year.

For the third trimester,


Chegg

(ticker: CHGG) posted revenue of $ 171.9 million, up 12% from a year ago, and slightly below Street’s consensus forecast of $ 174.5 million. Non-GAAP earnings were 20 cents per share, in line with consensus.

The direction was the problem: For the fourth quarter, Chegg is forecasting revenue of $ 194 million to $ 196 million, well below Street’s consensus of $ 240.6 million.

“At the end of September, it became clear to us that the education sector is experiencing a downturn that we believe is temporary and is a direct result of the Covid-19 pandemic,” Chegg CEO Dan Rosensweig said in a statement. “Despite these trends, our team continues to perform at a high level. Chegg is in a great position to come out of this stronger than ever and take advantage of the opportunities available to us. “

The company said its board of directors approved a $ 500 million increase in its repurchase program, bringing the total to $ 1 billion.

“A combination of variations, increased employment and compensation opportunities, along with fatigue, all led to significantly fewer registrations than expected this semester,” Rosensweig added in remarks prepared for the post-conference call. company benefit. “And the students who have registered take fewer and less rigorous courses and receive less graded homework. We believe this is a post-pandemic impact that will affect this school year but is not sustainable for higher education in the long term. Both free and paid learning sites and apps in the US and Canada have seen drastically reduced traffic since the start of the fall semester.

Chegg shares at the end of the session fell 25% to $ 47.03.

Write to Eric J. Savitz at [email protected]


Source link

Comments are closed.