Chegg com is good for making money
Chegg share: Book rental service is being transformed into an online company
Chegg stock analysis
Chegg went public as a rental service for expensive university books, but now only earns on a commission basis in this area in order to strengthen equity. Chegg is in the process of developing from an offline company to an online student service company that offers everything to do with education for schoolchildren and students, including online tutoring, software tools, special preparation courses and video content. Sales are achieved through a subscription model, as well as the sale of individual online tuition and the brokerage of renting books. The service model in particular is very scalable and, especially in the USA, also has a high willingness to pay. The online tutor service is also very interesting for many tutors, as they can earn something in their subject area without much effort and Chegg can build network advantages here and become an attractive platform.
The CHEGG brand has now overtaken existing publishers in the USA and helps thousands upon thousands of students in their daily work, and more than one in four students can remember them unsupported. This brand can then also be used, for example, to help students get a job and find an internship, and to generate sales on the company side. Chegg would like to cover the entire value chain from schoolchildren to students and young professionals.
Especially when it comes to tutoring, the Internet shows its strengths, as students are connected in seconds to suitable tutors online who can answer specific questions quickly.
Evaluation of business model, product, competitive advantage and brand of the share
Research on the market, competitors and market growth of the Chegg share
The target group is primarily the young students, who are used to doing everything online, including homework and tutoring. In addition to existing offline tuition, free platforms such as YouTube and Khan Academy are among the main competitors, which of course cover a large part of the demand with the free offer. Nevertheless, Chegg's offer complements well with specific questions and also caters to mobile users.
Of course, there are also many local offers at the respective universities. The market should continue to grow, despite its still manageable size, as tutoring will shift more to the Internet and the success of studies can be increased with such expensive tuition fees and at relatively manageable costs. Expansion into Asia and Europe would also mean great growth potential. In addition, the business model is very independent of crises, as students are little affected by the economy and, for example, the number of students even goes up in economic crises because people bridge the time between two jobs.
Assessment of management, strategy, investor relations and corporate culture
Chegg has been headed by Dan Rosenszweig since 2010, who passed Guitar Hero and Yahoo! was. The founders are no longer on board after converting the classifieds portal into a Netflix for books. The corporate culture and satisfaction is good, but not outstanding.
The strategy always includes acquisitions, such as InstaEDU, which nowadays forms the basic structure of demand-based online tutoring. Ideally, the acquisitions complement the product portfolio or market access.
Investors also included leading venture capital firms such as Kleiner Perkins and Insight Venture Partners.
Analysis of growth, profit, balance sheet and margins of the Chegg share
While the book rental business has been characterized by low margins and many small problems, the student service businesses are very high margin and growing strongly, and there is also much more potential.
Should you buy Chegg shares?
Chegg is relatively unnoticed in the process of successfully transforming itself into a purely digital company, where you can also draw certain parallels to Netflix. The company is therefore also a possible takeover target for the large educational publishers who need to strengthen their online business, but from a fundamental point of view a fair P / E ratio of 20 is also to be represented. The Chegg Aktioe is a typical venture capital investment with high risk and opportunities, which is open to everyone thanks to the stock exchange listing.
Score 7.9 / 10
=> Fair P / E ratio: 20
The fair P / E ratio was derived from the investresearch share valuation method. Ideally, buy stocks with the best online broker.
(All information provided without guarantee. The content only reflects the opinion and experience of the author without being influenced by remuneration from third parties. Shares analyzed by investresearch such as this in the wikifolios managed by the author and privately are regularly traded, which can lead to conflicts of interest It is not an invitation to buy or sell)
|Investment universe||Share internet|
|Fair P / E ratio||20|
|investresearch valuation last time|
|Cycles and regulations||8|
|ROA||N / A|
|Sales growth 5y||N / A|
|EBITDA growth 5y||N / A|
|KGV LTM at publ.||N / A|
Filed Under: StocksTagged With: US1630921096
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