Chegg Drops 23% In Initial Public Offering
Chegg is a textbook rental website that went public today. Chegg priced their shares at $12.50 each, but it dropped to $9.68 at the closing, according to Forbes. This is a 22.6% decline. Twitter, another large tech company that went public this month, saw their stock price jump 73% in their first day of trading last week. Chegg still raised $187.5 million from the offering and has a $1.1 billion market valuation. Chegg is trading with the symbol “CHGG” on the New York Stock Exchange (NYSE).
Around 5.5 million textbooks were sold or rented through Chegg this past fiscal year. Chegg is operating at a loss though. During the first 9 months of the year, Chegg saw a $50.4 million net loss, which is down from $57.2 million in the same period last year. Chegg started 8 years ago and their revenues increased in the last 3 years. Chegg is not expecting to hit profitability anytime soon.
Chegg is often called the “Netflix for textbooks.” Chegg reaches around 30% of U.S. college students. Chegg competes against services like BookRenter and Amazon. Barnes & Noble also has a textbook rental program. Before going public, Chegg’s investors included Kleiner Perkins, Pinnacle Ventures, and Insight Venture Partners. Chegg raised a total of $195 million in venture capital funding.