Most things that a company does are done with at least the intent to make the stock more valuable. Buying back its own stock, like education services stock Chegg (NYSE:CHGG) is doing tends to work in that vein, as there’s less stock available, and that which is left is, therefore, more valuable. With Chegg up nearly 11% in Thursday afternoon’s trading, it’s a plan that’s working. And Chegg plans to stick with the plan that’s so clearly working.
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Chegg stock slipped a bit from its highs today—it was up 11.6% at one point—but it’s still pretty close to the highs for the day. And mostly, it’s because Chegg put an extra $200 million behind its securities repurchase program. It’s not only buying back its stock, but also convertible notes, and can do so through just about any means it chooses, including private sales, bloc trades, or on the open market. Chegg hiked its plan at an interesting time, too; the original plan still has $89 million in capital left behind it.
Some believe, here, that Chegg is largely just circling the wagons. It was only back in May when Chegg lost half its value in one trading session after Chegg’s CEO Dan Rosensweig warned investors that ChatGPT was effectively eating Chegg’s lunch. While things have gotten better since then, the notion that artificial intelligence could be used as a teaching tool is not only still real, it’s also still valid. Considering the rapid improvement rate of artificial intelligence, and the rapidly-growing use rate of same, we could still find AI eating lunches all over the corporate landscape. Not just for Chegg, either.
Still, for now, analysts are taking a wait-and-see position with Chegg. Chegg stock is currently counted as a Hold by analyst consensus, thanks to a nearly-unanimous figure of eight Hold ratings and one Buy. Those who buy in, however, may get a shot at decent returns. Thanks to an average price target of $13.36 per share, Chegg stock comes with a 26.76% upside potential.
