Chegg's Options Imply 23% Post-Earnings Move

Chegg's options market implies a 23.0% move in its share price post-earnings, with calls leading puts 19:5. Implied volatility suggests the market expects a move of 30c. The median move over the past eight quarters is 12.9%.

Title: Chegg's Q2 Earnings: A Mixed Bag for Online Learning Platform

Chegg Inc. (CHGG) reported its second-quarter earnings for 2025, revealing a stronger-than-expected performance with earnings per share (EPS) of $0.10, doubling the forecasted $0.05. Revenue came in at $105.1 million, slightly ahead of the anticipated $101.01 million. Despite these positive surprises, Chegg’s stock dropped 7.91% to $1.28 in aftermarket trading, reflecting investor concerns over declining subscriber numbers and a significant year-over-year revenue decrease [3].

The company's EPS of $0.10 surpassed expectations by 100%, while revenue of $105.1 million beat forecasts by 4.05%. Total subscribers fell 40% year-over-year to 2.6 million. Chegg’s stock price declined by 7.91% in aftermarket trading, indicating that the market is cautious about the company's future prospects [3].

Chegg’s overall performance in the second quarter of 2025 showed resilience in earnings despite a challenging market environment. The company is navigating a significant transition as it shifts its focus towards AI-driven educational tools and cost management strategies. The year-over-year revenue decline of 36% highlights the challenges Chegg faces in retaining subscribers amidst a competitive landscape. However, the company’s strategic pivot towards AI and skills-based learning platforms indicates a proactive approach to capturing new market opportunities [3].

The options market implies a 23.0% move in its share price post-earnings, with calls leading puts 19:5. Implied volatility suggests the market expects a move of 30c. The median move over the past eight quarters is 12.9%, indicating a relatively stable performance [1].

The sustainability of the stock's immediate price movement based on the recently-released numbers and future earnings expectations will mostly depend on management's commentary on the earnings call. Chegg shares have lost about 13.7% since the beginning of the year versus the S&P 500's gain of 7.6%. The company has underperformed the market so far this year, but the question that comes to investors' minds is: what's next for the stock? [2].

Chegg has topped consensus revenue estimates four times over the last four quarters and has surpassed consensus EPS estimates two times. However, the company's earnings outlook is unfavorable, with the current consensus EPS estimate being -$0.15 on $90.81 million in revenues for the coming quarter and -$0.40 on $418.7 million in revenues for the current fiscal year [2].

Investors should be mindful of the fact that the outlook for the industry can have a material impact on the performance of the stock as well. In terms of the Zacks Industry Rank, Internet - Software is currently in the top 32% of the 250 plus Zacks industries. Our research shows that the top 50% of the Zacks-ranked industries outperform the bottom 50% by a factor of more than 2 to 1 [2].

Another stock from the same industry, Box (BOX), has yet to report results for the quarter ended July 2025. The results are expected to be released on August 26. This online storage provider is expected to post quarterly earnings of $0.31 per share in its upcoming report, which represents a year-over-year change of -29.6%. The consensus EPS estimate for the quarter has been revised 19.1% higher over the last 30 days to the current level [2].

References:
[1] https://finance.yahoo.com/news/chegg-chgg-q2-earnings-revenues-220502770.html
[2] https://www.nasdaq.com/articles/chegg-chgg-q2-earnings-and-revenues-beat-estimates
[3] https://www.investing.com/news/transcripts/earnings-call-transcript-chegg-q2-2025-beats-eps-forecast-but-stock-tumbles-93CH-4171565