Gross profit is basically negative on their textbook rentals now? Why would management report Ebitda without adding back textbook depreciation? This makes no sense. It seems like CHGG is buying text books for $100, renting it 2.5x for $28, then selling it for $15 = -$15 per book. And competition just intensified per management's comments on the call driving revenue per book down.
This thing could unravel here...if the textbook business is just a money losing way to build a database, then CHGG is no more than a $650m market cap company that connects students to a call center in India to help them with their homework...pretty silly
Huge call option volume today before the release...lots of Feb/Mar 7.50 and $10 strikes. These traders are going to have to dynamically hedge these positions...should be some interesting action tomorrow.
Because if the included tthe $80m textbook depreciation, $22 m stock based compensation and $2m depreciation of intangible assets it would imply a full year operating loss of $114M on $310 million in revenue.... So for very dollar in revenue they generate, they lose roughly $33 cents.... OUCH.. This goes much lower today ..