Needham reiterates Hold rating on Chegg stock as former CEO returns

Investing.com - Needham has reiterated its Hold rating on Chegg (NYSE:CHGG), currently valued at $156 million, as the education technology company announced the return of former CEO Dan Rosensweig to the role of President and CEO. According to InvestingPro data, the company maintains impressive gross profit margins of 69% despite recent challenges.

The education technology company has completed its strategic review and decided to continue as a standalone public company rather than pursue acquisition offers or other strategic alternatives. InvestingPro analysis shows Chegg holds more cash than debt on its balance sheet, though two analysts have recently revised their earnings downwards.

Rosensweig, who previously served as CEO from 2010 and had been serving as Executive Chairman, returns to lead Chegg at a time when the company requires another strategic pivot, according to Needham.

Chegg plans to restructure its business to operate its academic products with a lower cost structure while refocusing growth efforts on language learning and skills development businesses.

Needham acknowledged that while the strategic pivot makes sense, its research indicates Chegg faces significant challenges in gaining market share in what it describes as "two highly competitive markets."

In other recent news, Chegg Inc. reported its second-quarter earnings for 2025, surpassing expectations with earnings per share of $0.10, which was double the anticipated $0.05. The company also reported revenue of $105.1 million, slightly above the forecasted $101.01 million. Despite these better-than-expected financial results, Chegg is facing challenges with declining subscriber numbers and a notable year-over-year revenue decrease. Additionally, the company has agreed to pay $7.5 million to settle Federal Trade Commission allegations regarding its subscription cancellation practices. The FTC accused Chegg of making it difficult for consumers to cancel recurring subscriptions for its online learning tools. Furthermore, the Federal Trade Commission has filed a lawsuit against Chegg for allegedly not providing a straightforward way for subscribers to cancel recurring charges. These developments highlight ongoing legal and operational challenges for Chegg.

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