And we think ultimately the quality of this team can get things back on track over time. You know, again, we think this is a team that's been around tech. We went from low 20% growth into the low teens. Like, you've got a big cut this morning for most on the Street, including our team. And the numbers keep coming down quarter after quarter after quarter. So I think numbers have been hit hard, unlike Amazon, where the stock hasn't worked all year. And the Street just went to high single digit growth. They've been growing at an incredible rate.
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And that's obviously not going to be enough, given the lower numbers.īut remember, in the past, this company started at, you know, 20% plus growth. They did say October was getting better relative to September trends. So, you know, again, I look at this and say this is more of a call for long-term investors. And again, they have a number of other initiatives that are underway that we think can also emerge to help support their core learning programs. So I think this is really going to be more of a 2022 story. So when you think about that 50% increase in seasonal workers versus going back to school, and I haven't worked in the last year, you're probably going to choose that if you're a working mom or working dad. And I'm not sure how long you actually even have to stay there. I mean, Amazon mentioned now they're throwing $3,000 bonuses at people just to get them on. And the enrollment trends like the labor shortage isn't going away.Īnd the number of job opportunities and signing on- sign-on bonus. Ultimately, I think when you look at the comps that they had, they had massive comps last year. And that's why I'm saying for long-term investors, that this could be a wash this academic year. So, to your point, absolutely, there's no near-term catalyst. So what do you expect in terms of timeline for that kind of rebound?īRENT THILL: They tend to look at- fall enrollment tends to be what happens in spring. And the company didn't necessarily point to any catalyst that would stoke a pickup in enrollment or a return to more rigorous curriculum in the near term.
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But one of the things that the company actually did was it lowered its forecast for both revenue and adjusted EBITDA for the full year. And I think for long-term holders, they're going to get rewarded.ĮMILY MCCORMICK: Brent, you mentioned that some of the headwinds to Chegg would moderate over time. You typically get an opportunity to take a shot here under 35. So historically, when you get a magnitude of a move- and I honestly have never seen a 47% move down. The trend lines, the visits to their website, we could see the data was softening, but again, I don't think this is the end of Chegg. Clearly, the stock was weak ahead of the print. So I think this is one of those opportunities where, you know, no one really saw the magnitude of this coming. And it is extremely well run by the same management team that's been there for a decade. The stock's trading at like it's a broken tech company. For those long-term investors, I think they're going to make money. Ultimately, the economy is doing well, lots of job opportunities. Companies are throwing a lot of money at workers.Īnd so their tradeoff is, do I work right now after I haven't been able to work in the last year or go to school? And so enrollments are down. As the world opens, right, and there's a labor shortage- and we're seeing this in all those companies.
So if you think about the pandemic, everyone was locked down. And this is, you know, really an industry headwind, not a competitive issue. And 10 years of this management team being there, they've never seen this magnitude of a slowdown. We think they're going to be aggressive on the buyback.Ĭertainly, this was not expected. The company has over $600 million on their buyback. So, our view would be, I think this is overdone. And so what I would say is that this company has historically been extremely consistent, is very well-run, and is helping the world achieve the mission from learning to earning. What do you do with the stock after seeing it plunge 46%?īRENT THILL: We don't really see moves like this in our coverage. I mean, the losses have accelerated throughout the session. Jefferies analyst Brent Thill covers Chegg and is here for our call of the day. BRIAN SOZZI: Tech shares are getting crushed after warning on the state of the education market.
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