Chegg (CHGG): A Rapidly Growing Momentum Stock Still Available at a Discount
Written by Emily J. Thompson, Senior Investment Analyst
Updated: Sep 12 2025
0mins
Should l Buy CHGG?
Source: NASDAQ.COM
Momentum Investing Overview: Momentum investing involves buying stocks that are trending upwards, contrary to the traditional strategy of buying low and selling high. This approach can be risky as stocks may lose momentum if their valuations exceed future growth potential.
Chegg (CHGG) as a Momentum Stock: Chegg has shown significant price increases, with a 27% rise in four weeks and an 11.1% gain over 12 weeks. It has a high Momentum Score and is trading at a low Price-to-Sales ratio, indicating it may be a good investment opportunity.
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Analyst Views on CHGG
About CHGG
Chegg, Inc. provides a student-first connected learning platform. The Company provides individualized learning support to students as they pursue their educational journeys. Available on demand 24/7 and powered by quality learning insights, the Chegg platform offers students artificial intelligence (AI)-powered academic support thoughtfully designed for education, coupled with access to a vast network of subject matter experts who help ensure quality and accuracy. Its service and product offerings fall into two categories: Subscription Services, which encompass its Chegg Study Pack, Chegg Study, Chegg Writing, Chegg Math, and Busuu offerings that can be accessed internationally through its websites and on mobile devices, and Skills and Other, which include its Chegg Skills, advertising services, content licensing, print textbooks and eTextbooks offerings. Chegg Study subscribers have access to personalized, step-by-step learning support powered by AI and computational engines.
About the author
Emily J. Thompson
Emily J. Thompson, a Chartered Financial Analyst (CFA) with 12 years in investment research, graduated with honors from the Wharton School. Specializing in industrial and technology stocks, she provides in-depth analysis for Intellectia’s earnings and market brief reports.
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- Tuition Pressure: The 2026 College Hopes and Worries survey revealed that over 9,400 students and parents consider tuition costs their biggest stressor, with some schools' annual costs nearing six figures, reflecting a staggering 914% increase in education costs since 1983, outpacing other household expenses.
- Surge in Student Loans: From 2005 to 2025, education debt surged by 343%, with 97% of graduates indicating that their debt has delayed major life goals, highlighting the increasing financial burden of higher education that forces students to borrow to cover tuition costs.
- Importance of Financial Aid: The Princeton Review noted that while many elite schools offer generous financial aid, Harvard does not provide merit-based scholarships, instead offering free tuition for undergraduates from families earning less than $200,000, underscoring the critical role of financial aid in school selection decisions.
See More
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- Equity Award Program: On March 13, 2026, Chegg granted a new employee 150,000 restricted stock units (RSUs) under the 2023 Equity Inducement Plan, aimed at attracting and retaining talent while enhancing the company's appeal in the competitive learning platform market.
- Vesting Schedule: The RSUs will vest over two years, with 50% vesting after 12 months of continuous service and the remaining 50% vesting in equal quarterly installments thereafter, designed to incentivize long-term employee retention and performance.
- Market Positioning: Chegg focuses on the $40 billion skilling market, offering innovative tools for workplace readiness, professional upskilling, and language learning, showcasing its strategic positioning and market potential in the edtech sector.
- AI-Driven Support: Chegg continues to provide AI-driven personalized support for students, committed to improving learning outcomes and career opportunities, further solidifying its leadership in the global education market.
See More
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- Workforce Reduction: Block announced a 40% workforce cut, reducing its headcount from over 10,000 to just under 6,000, indicating a strategic shift in operations influenced by AI tools, which is expected to significantly enhance overall efficiency and profitability.
- Stock Price Reaction: Following the layoff announcement, Block's stock surged approximately 25% in after-hours trading, ultimately closing up 17%, reflecting increased investor confidence in the company's future profitability.
- Earnings Forecast: Block's annual earnings forecast surpassed market expectations, with analysts generally optimistic that AI-driven efficiencies will drive profit growth, leading Morgan Stanley to upgrade its rating to overweight.
- Restructuring Costs: Block anticipates restructuring costs between $450 million and $500 million, primarily front-loaded in the first quarter, with Dorsey opting for a one-time layoff approach to mitigate long-term negative impacts on employee morale.
See More
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- Massive Workforce Reduction: Block announced a nearly 40% workforce cut, reducing its headcount from over 10,000 to just under 6,000, indicating a significant shift in operational strategy driven by AI tools, although this move has sparked widespread market debate.
- Significant Stock Surge: Following the layoff announcement, Block's stock rose approximately 25% in after-hours trading, closing up 17%, reflecting investor confidence in the company's future profitability, despite analysts expressing caution regarding long-term growth prospects.
- Optimistic Earnings Forecast: Block's annual earnings forecast exceeded market expectations, even as last quarter's results were largely in line with projections, leading Morgan Stanley analysts to upgrade their rating to overweight, citing AI-driven efficiencies as a key profitability driver.
- Restructuring Cost Impact: Block expects to incur $450 million to $500 million in restructuring costs, primarily front-loaded in Q1, with Dorsey opting for a one-time layoff approach to mitigate morale issues, although this decision has raised questions about the company's future trajectory.
See More
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- Industry Trend Warning: According to Challenger, Gray & Christmas, January 2026 saw the highest number of layoff announcements since 2009, indicating that companies are tightening their belts amid economic uncertainty, potentially signaling broader industry challenges ahead.
- Automation Driving Layoffs: CEO Jack Dorsey highlighted that automation driven by artificial intelligence is a contributing factor to the layoffs, predicting that many companies will undergo similar structural changes in the coming year, which may intensify job competition within the industry.
- Job Seeker Strategies: Experts recommend that laid-off employees actively negotiate for benefits like continued health insurance before leaving and broaden their job applications to adapt to the current sluggish hiring market, thereby increasing their chances of securing new employment.
See More
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- Controversial Law Enforcement Procedures: Acting President Claire Shipman stated that federal agents misrepresented their intentions to gain entry into a university-owned residential building under the pretense of searching for a 'missing person', raising questions about the transparency and legality of such enforcement actions.
- Campus Safety Policies: Shipman emphasized that all law enforcement agents are required to possess a judicial warrant or subpoena to enter non-public areas of the campus, a policy designed to protect student privacy and safety while ensuring that law enforcement actions comply with regulations.
- Tense Government-University Relations: Columbia has faced scrutiny from the Education Department for failing to meet federal anti-discrimination laws and was required to pay $200 million to restore federal funding, a series of events that may further strain the relationship between the university and the Trump administration.
See More
