Why Are Chegg (CHGG) Shares Soaring Today

Shares of online study and academic help platform Chegg (NYSE:CHGG) jumped 5.8% in the afternoon session after the stock rebounded as the company announced a major restructuring plan that included a leadership change and a significant reduction in its workforce. As part of the shift, executive chairman Dan Rosensweig returned to the role of president and CEO. Chegg’s plan involved cutting its workforce by 45% with the goal of reducing expenses by $100 million by 2026. This move was a response to challenges from reduced Google search traffic and the growing impact of AI on its academic business. The company aimed to reposition itself for growth in the skilling market, valued at over $40 billion. Chegg expected its new professional and enterprise-focused offerings to bring in around $70 million in revenues in 2025.

After the initial pop the shares cooled down and closed the day at $1.06, up 10.5% from previous close.

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Chegg’s shares are extremely volatile and have had 101 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.

The previous big move we wrote about was 2 days ago when the stock dropped 15.4% on the news that the stock continued to pull back as the company announced a major restructuring plan that included laying off about 45% of its workforce and reappointing its former CEO to navigate challenges from Artificial Intelligence. The educational technology firm announced the plan as it struggled with the negative impact of AI, which has hurt its core homework help business. According to reports, students increasingly turned to free AI tools, making Chegg’s paid model less attractive. This shift resulted in a significant drop in revenue, subscribers, and web traffic. The restructuring involved cutting about 388 jobs and brought back Executive Chairman Dan Rosensweig to the roles of CEO and President. The move suggested an urgent shift in the company’s operational approach to address its financial distress.

Chegg is down 34.5% since the beginning of the year, and at $1.10 per share, it is trading 58.5% below its 52-week high of $2.65 from December 2024. Investors who bought $1,000 worth of Chegg’s shares 5 years ago would now be looking at an investment worth $15.09.

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