Chegg Stock Falls to 4-Year Lows on Slashed Forecast

The stock is eyeing its biggest daily drop since November 2021

Digital Content Manager
May 3, 2022 at 10:45 AM
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The shares of Chegg Inc (NYSE:CHGG) are trading at their lowest level since early 2018, last seen down 34% at $16.49, despite the online education concern posting profits and revenue that topped analysts estimates for the first quarter. The company did slash its full-year revenue and adjusted EBITDA forecasts, however, noting that the slowing economy and rising inflation has lead many to postpone their education or take fewer or less rigorous classes.

Analysts have responded in turn, with no less than five brokerages lowering their price targets. Piper Sandler more than halved its price objective to $21 from $44, and lowered its rating to "neutral" from "overweight." More analysts could follow suit, as five of the 13 in coverage called CHGG a "strong buy" coming into today, while the 12-month consensus price target of $39.23 is a 137% premium to current levels. 

Should these losses hold, CHGG could be headed for its biggest daily percentage drop since November 2021. The equity breached a recent floor at the $23 level right out of the gate, which has provided support on the charts since its aforementioned November bear gap. Now, CHGG is down 45% in 2022, and nearly 80% in the past 12 months. 

Options traders are also targeting Chegg stock, with 15,000 calls and 11,000 puts across the tape so far, which is 27 times the intraday average. The most popular contract is the May 17.50 call, followed by the 15 put in the same monthly series, with positions being opened at both. 


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