Chegg (NYSE:CHGG) Stock a Buy: Leader in Online Education

The global pandemic has already caused significant changes in the way that technology is used daily. Some companies are suffering from these changes while others are seizing the opportunity to gain market share and establish themselves as industry leaders. For example, Chegg (NYSE:CHGG) is a company that was already investing heavily in digital education services before the pandemic. Now, that investment is paying off as many schools and universities have shifted to online education for the foreseeable future.

It’s safe to say that the entire education system was overdue for a change, and this year that change has occurred at a rapid pace. While we don’t know exactly how long students will be out of the classroom, Chegg is benefitting from the current situation and is well-positioned to continue growing its business even after in-class learning returns. Students that are using Chegg’s services now are realizing how valuable the learning tool is while it’s also clear that the new hybrid-learning model is here to stay. Chegg is a strong coronavirus stock that is up over 90% year-to-date and worth a look at this time. Let’s take a deeper look at why Chegg stock is a buy below.

Leading Online Student Learning Platform

Students that are focused on getting good grades and progressing through their coursework have had to make some big adjustments thanks to the pandemic. With many universities and schools moving to online classes, it has been challenging for young minds to get the same hands-on learning experience that they would typically get in the classroom. That’s part of the reason why Chegg is an interesting investment prospect at this time, as it has become an indispensable tool for thousands of students during this difficult period.

Chegg operates a direct-to-student learning platform that is helping students to improve their scholastic performance during the pandemic. The company offers Chegg Services, which is a line of digital products and services that can assist students with live tutoring, homework problems, studying, exam prep, and more. Chegg also offers textbooks and e-textbooks for rent or purchase. The thing that is so compelling about Chegg’s business is that it has created an innovative learning experience that will likely result in widespread adoption over the long-term. These types of platforms are going to be the norm worldwide and Chegg is the leading provider, which means it can continue riding this secular trend for years to come.

Top Marks in Earnings and Room for Continued Growth

If you’re looking for proof that Chegg has been benefitting from the digital transformation of education during the pandemic, look no further than the company’s recent earnings release. In Q2, Chegg saw Total Net Revenues increase by 63% year-over-year to $153 million. The company’s Chegg Services platform, which is offered on a subscription basis, saw an increase of 67% year-over-year in Q2 to a total of 3.7 million subscribers. The company’s management has raised revenue expectations for FY 2020 to $610 million, which would be year-over-year growth of 48%.

To quote Chegg’s CEO Dan Rosenweid, “Chegg was built with a belief that learning would move increasingly online and we have always bet on that inevitability.” It is clear that the bet is paying off for the company and that Chegg is nicely positioned to continue capitalizing on the shift to remote learning. The company is steadily expanding into international markets and continues to make exciting acquisitions such as the technical learning platform Thinkful, content library StudyBlue, and math-problem solving company Mathway. These types of acquisitions are a statement of intent from Chegg to create a universal online learning platform.

With over 36 million high school and college students in the U.S. that could benefit from Chegg’s services and millions more in countries around the world, the growth potential for Chegg is undeniable. It’s clear that this company is committed to becoming the leading connected learning platform over the next few years, and investors that believe in the online learning trend should take note.

Strong Pandemic Play

Chegg should be viewed as one of the better “stay-at-home” stocks to consider buying at this time, particularly since it took a significant dip during the recent market correction. With tons of room for growth, the permanent shift to online learning, and continued uncertainty about when students will return to the classroom, don’t be surprised to see Chegg stock continue performing well throughout the rest of the year and beyond.