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Chegg (CHGG) Stock Soars on Strong Earnings Beat

Anyone who held Chegg (NYSE:CHGG) stock overnight is probably enjoying their gains today. First of all, the company posted top- and bottom-line beats for 2022’s third quarter. Plus, Chegg hiked its revenue-range forecast for the full year.

Online education facilitator Chegg can’t count on the Covid-19 catalyst of 2020 and 2021 to persist this year and into 2023. Thus, the company is under pressure to demonstrate its viability from a financial standpoint.

Fortunately, Chegg achieved that with a stellar Q3 earnings report. Analysts expected the company to report $158.3 million in quarterly revenue, yet Chegg actually generated $164.7 million. That’s down 4% year over year (YOY), but a beat is a beat, right?

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Meanwhile, Chegg reported 21 cents of quarterly non-GAAP diluted net income per share. This, to be honest, wasn’t a big improvement over the year-earlier quarter’s result of 20 cents per share. Yet, it’s still higher than Wall Street’s estimate of 14 cents per share.

What’s Happening With CHGG Stock?

Clearly, CHGG stock traders were in celebration mode this morning as the shares gained 27% in value at one point. Was this eye-popping rally all about Chegg’s third-quarter results, though?

Possibly, but not necessarily. It’s also worth noting that Chegg raised its full-year 2022 revenue guidance from the previous range of $745 to $770 million, to the currently expected range of $762 million to $765 million.

That’s not the only range raise, by the way. Chegg also hiked its forecast for 2022 adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) from $225 million to $235 million, to a range of $252 million and $255 million.

Moreover, Chegg CEO and President Dan Rosensweig proudly observed that Chegg Services revenue grew 8% YOY, reaching 4.8 million subscribers during the quarter.

So, perhaps the online education business can still be lucrative even if Chegg can’t rely on the Covid-19 catalyst. At this rate, furthermore, Chegg might provide robust returns for its shareholders in the coming quarters.

On the date of publication, David Moadel did not have (either directly or indirectly) any positions in the securities mentioned in this article. The opinions expressed in this article are those of the writer, subject to the InvestorPlace.com Publishing Guidelines.

David Moadel has provided compelling content – and crossed the occasional line – on behalf of Motley Fool, Crush the Street, Market Realist, TalkMarkets, TipRanks, Benzinga, and (of course) InvestorPlace.com. He also serves as the chief analyst and market researcher for Portfolio Wealth Global and hosts the popular financial YouTube channel Looking at the Markets.

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