- Online education platform Chegg has seen rising interest amid the COVID-19 pandemic.
- Shares are up nearly 70% in the second quarter alone.
- Chegg CEO Dan Rosensweig said he expects second quarter subscriber growth to accelerate to more than 45%.
Online educational technology company Chegg Inc (NYSE: CHGG) has seen its stock soar higher by nearly 70% since the start of the end of March as the company’s goal of offering a compelling online education platform is gaining traction amid the COVID-19 pandemic, Chegg CEO Dan Rosensweig said on a Fox Business interview.
Chegg’s founding purpose was to help more people not only learn more often but do so at a cheaper cost compared to traditional educational institutions, Rosensweig said. The company still holds these principles true, along with the goal of making education more personalized and more on-demand with a “student first” mentality.
It goes without saying the true travesty of the COVID-19 pandemic is the death toll which surpassed 100,000 in the U.S. alone, the CEO said. Beyond the death toll, the small business community and their workers shouldn’t be overlooked given their vulnerability to economic downturns.
Among the small businesses that face potential bankruptcy are colleges, according to Rosensweig. Across the U.S., there are between 4,500 and 5,000 independent colleges of all sizes. Half of those are small institutions that face potential bankruptcy if they can’t get tuition and other related revenue. The other half, state-financed and large schools with massive endowment funds, are likely to survive.
The cost difference
Fox Business’ live on-air fact checks confirm Chegg’s current pricing is consistent with its philosophy of providing cheaper access to education. For example, the 8th edition of “Principles of Microeconomics” sells for $249 but Chegg users can buy a used book for $60.99, rent it for $21.49, or buy it new for $130.99.
The Chegg CEO explained his textbook rental business is “detrimental” to the publishing industry but “phenomenal” to students. The price of textbooks has gotten “ridiculous,” and in this particular example, the 8th edition is not much different from the second edition.
But Chegg’s core business falls within the online homework category which costs $14.95 — the same price it charged 10 years ago, he said. Students have access to expert Q&A, live tutoring for 50 cents a minute, access to tens of thousands of videos, among much more.
“We are helping students who don’t have the same support that wealthy students have,” he said.
The company’s strong proposition justifies its explosive growth which is currently gaining momentum. During the first quarter, total subscribers rose 32% to 2.9 million. But Rosensweig said he expects second quarter subscriber growth to accelerate to more than 45%.