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Chegg Shares Slump After Revenue Results and Guidance

Chegg forecast revenue of $194 million to $196 million for the fourth quarter, below analysts’ projection of $241.7 million.
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Chegg  (CHGG) - Get Free Report shares slumped on Tuesday after the online-education company reported third-quarter earnings and guidance.

The company swung to profit of a nickel a share from a year-earlier loss of 29 cents a share. A survey of analysts by FactSet had been estimating a loss of 4 cents a share for the latest period.

It posted revenue of $171.9 million for the third quarter, trailing the FactSet analyst consensus of $173.9 million.

And for the fourth quarter, Chegg forecast revenue of $194 million to $196 million, below analysts’ projection of $241.7 million.

The stock on Tuesday closed at $32.12, down 49%. That leaves it down 63% year to date.

“In late September, it became clear to us that the education industry is experiencing a slowdown that we believe is temporary and is a direct result of the Covid-19 pandemic,” Chegg CEO Dan Rosensweig said in a statement.

The pandemic has “begun to negatively impact enrollments, student course-loads and quantity of graded assignments,” he said, according to MarketWatch.

“A combination of variants, increased employment opportunities, and compensation, along with fatigue, have all led to significantly fewer enrollments than expected this semester.”

Morgan Stanley downgraded Chegg to equal weight from overweight after the news.

“With concerning commentary around the demand for Chegg solutions during this academic year, Q4 revenue guidance 19% lower than prior implied Q4 guidance, and no 2022 guidance, we lower our 2022 revenue estimate by 18%, suggesting a Covid reset, resulting in only 7% revenue growth for 2022,” the bank’s analysts said, according to CNBC.

In other equity news, Barclays has compiled a list of five stocks that it says provide investors growth and value: Ford Motor  (F) - Get Free Report, General Motors  (GM) - Get Free Report, Halliburton  (HAL) - Get Free Report, Southwest Airlines  (LUV) - Get Free Report and UnitedHealth  (UNH) - Get Free Report.