What Happened?
Shares of online study and academic help platform Chegg (NYSE:CHGG) jumped 7.5% in the afternoon session after the stock appeared to rebound following a sharp decline in the previous trading session. The prior day's drop of over 8% occurred after the Federal Trade Commission (FTC) took action against a peer company, Illuminate Education, Inc., over a major data breach. That news had raised concerns among investors about the possibility of increased regulatory scrutiny and data security issues across the entire education technology industry. The stock's recovery happened as the broader market rallied, with renewed optimism about a potential Federal Reserve rate cut helping lift equities.
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What Is The Market Telling Us
Chegg’s shares are extremely volatile and have had 105 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was about 24 hours ago when the stock dropped 8.7% on the news that the Federal Trade Commission (FTC) took action against peer company Illuminate Education, Inc. over a major data breach. The FTC's complaint alleged that Illuminate's security failures led to a hack that exposed the personal data of more than 10 million students. This news raised concerns among investors about the possibility of increased regulatory scrutiny and data security issues across the entire education technology industry. The action against a fellow company in the sector appeared to negatively affect investor confidence in other education technology stocks.
Chegg is down 44.4% since the beginning of the year, and at $0.93 per share, it is trading 64.8% below its 52-week high of $2.65 from December 2024. Investors who bought $1,000 worth of Chegg’s shares 5 years ago would now be looking at an investment worth $12.28.
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