Needham ‘incrementally positive’ on Chegg, Duolingo

Needham keeps a Buy rating on Duolingo (DUOL) with unchanged $160 price target and a Hold rating on Chegg (CHGG) but notes that the firm is “incrementally positive” on the names following the firm’s Fall Semester 2023 Student Survey of about 500 students across 7 countries on their usage of digital study tools and language learning apps. Despite continued growth in usage of ChatGPT, students are not replacing Chegg with the OpenAI offering, as Chegg maintained stable share domestically and dual usage of ChatGPT and Chegg rose on semester-to-semester basis, the analyst tells investors in a research note. Data further showed that strong trends extended to language learning as a durable number of students intend to learn a language, with Duolingo maintaining its dominance of the language learning market and expanding its lead both internationally and domestically.