Deep dive into Chegg: The beginning of the end

Chegg $CHGG is a great example of a company being disrupted by AI, and especially Large Language Models ("LLMs"). This video outlines the development over the last years, and a few potential scenarios of the company's future.

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The video is created for entertainment / informative purposes and should not be treated as any specific inducement to make an investment or follow a strategy. The statements/opinions are based on my analysis and can change in case new information is introduced.

Of course, past performance is not indicative of future results and therefore there are no guarantees for outcome in any direction.

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[inorite]

You missed one big reason why Chegg is failing, "I bet they lost their license for publisher book answers and their "expert" answers are mostly just ran through AI and completely wrong."

Why would anyone continue to pay for a service that doesn't solve the problem you're looking to solve?

[victorhinvesting]

Thank you for the video. CHGG produces high FCF, and if they can find a way to grow, the stock will go up 3X. Or it will continue to down is value, but the data is work a lot and it might be a good acquisition target. Time will tell.

[tonyh]

Martin shreki had an interesting take on this stock. You can have negative growth rate in perpetuity but still have an undervalued stock with the DCF model if you’re looking for short term opportunities.

[montramedia]

they still have 3.8 million subscribers (reported) that's pretty good reoccurring revenue; even if it dropped to 900k subscribers that's still good money to buy into a company for. only way you could lose is if they go bankrupt which is just unlikely because at the end of the day they'll always have their share of the rental market; in my opinion; if they only had their rental service as the only thing they were offering i would thing the company would be at lest $10 a share which could still be undervalued.

[Omahaneb]

This company has been so poorly ran - you’re right (I’m an investor)

I believe they got caught up in the free money era (got greedy and lost track of focus

[Omahaneb]

You perform great and concise analysis. Nice work

[siddhartharaja]

Chegg is not distrusted by AI, it is distrusted by indian experts who solve the questions as expert. They post their own questions using bots and solve them using AI. There is some loophole in chegg payment gateway, due to which student account get total refund. Due to this, chegg has a got 616 million dollar loss, thats the sole reason and nothing related to chatgpt effect.

[josephlombardo]

Thank you for the video. So essentially to come up with the liquidation value you have assumed a 0% recovery rate for goodwill and intangible assets and 100% recovery rates for everything else on the balance sheet. Is that what you usually do for any company to come up with liquidation value or just in this case?

[milk_nhoney]

Company is ran by a bunch of egotistical people who have no vision for the product. The staff works 18+ hour days and still get laid off every quarter. Sad

[vishalprajapati]

I am from India can you explain in few words what is the future of this company....what is your view