Chegg Continues to Grow, Even as Students Return to School
Chegg (NYSE:CHGG) is popping after a strong second-quarter earnings report. Chegg’s strong numbers eased fears that demand for the company’s online education platform would taper off as the world normalized and students returned to school.
We didn’t see those fears come to fruition in any sense. Instead, Chegg experienced massive subscriber growth, massive revenue growth and massive profit margin expansion.
Basically, its earnings looked a lot like most of its pandemic-era earnings reports.
Although Chegg’s numbers were great in many ways, we are especially bullish on the company’s second-quarter subscriber growth and guide for the second half of 2021.
On a two-year compounded annual growth basis, Chegg’s Q2 subscriber base rose 48% year-over-year.
This is nearly the exactly same as its Q2 two-year compounded growth rate of 49%.
In other words, even though students are returning to school, Chegg’s subscriber base is growing at nearly an identical pace to its pandemic-era growth, backing out Covid-19 noise. That’s a great sign.
And better yet, Chegg management guided up for both third- and fourth-quarter revenues. This is more important, because, while not all students returned to school in Q2, most will likely return to school by the fall and winter.
Management is confident that despite the mass “return to school” trend, the company will maintain significant growth. That’s impressive.
The Bottom Line on CHGG Stock
We believe this report cemented the reality that Chegg is not just a tool that is useful during a pandemic.
It’s a digital learning platform that will be used by students regardless of where they’re learning, whether that be remotely at home or in-person at school.
This reality underscores the long-term potential for Chegg to turn into a global academic ubiquity.
In the event that does happen, CHGG stock has an enormous upside.
CHGG stock is one of my top picks that, long-term, will score investors big returns.
But it’s not the only high-growth, high-return stock on my radar today.
In fact, I have more than 50 hypergrowth stocks that could score investors Amazon-like returns over the next months and years.
These stocks include the world’s most exciting autonomous vehicle startup, a world-class “Digitainment” stock creating the building blocks of the metaverse, a company that we fully believe is a “Tesla-killer,” and many more.
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On the date of publication, Luke Lango did not have (either directly or indirectly) any positions in the securities mentioned in this article.
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