How Chegg Grew Their Share Price 20x In Four Years

In the mid 2010’s, Chegg seemed like it would be yet another eCommerce flame out. High flyers like GroupOn and GoPro were starting to crash and many investors assumed textbook rentals would succumb to a similar fate. A fine business, but a lot smaller than initially expected. 

In 2015, Chegg’s revenue fell 1%. In 2016, it dropped 16% further. The business was in the midst of a transition from physical textbook rentals to textbook question solution subscriptions and the future was murky. In early 2016 the stock traded for just over $4.

But then things started to change. Margins started improving, and the digital subscription business took off.