Cheggs (CHGG) $55M Investor Settlement
Chegg agreed to a $55 million settlement with $CHGG investors over claims it misled them about the sustainability of its pandemic-driven growth.
Overview
In 2021, Chegg was accused of hiding that the sustainability of its growth depended on remote learning driven by the Covid-19 pandemic. By late 2021, when the company reported a 10% drop in subscribers, $CHGG fell 50%. Following this, Chegg faced a lawsuit from investors.
Timeline
May 5, 2020 – Chegg reported record subscriber growth, with a 35% year-over-year increase, driven by remote learning during the pandemic.
November 1, 2021 – Chegg revealed a 10% decline in subscribers as students return to in-person learning, causing $CHGG to drop 50% and erase $4B in market value.
December 22, 2021 – Investors filed a lawsuit, alleging that Chegg misled them about the sustainability of its pandemic-driven growth.
September 26, 2024 – Chegg agreed to settle for $55M to resolve investor claims.
Background
During the COVID-19 pandemic, Chegg capitalized on remote learning, presenting its tutoring and study resources as essential academic tools. The company claimed that demand for its platform reflected a long-term shift toward digital education.
However, as schools returned to in-person learning, reports revealed that many students had primarily used Chegg to cheat on online exams rather than for legitimate academic support. As reliance on remote learning declined, so did Chegg’s subscriber base.
On November 1, 2021, Chegg reported a 10% drop in subscribers, leading to a 50% decline in $CHGG stock and wiping out $4B in market value.
Following this, on December 22, 2021, investors filed a lawsuit, claiming that Chegg misled them about the sustainability of its pandemic-driven growth.
What can investors expect now?
Chegg ($CHGG) has agreed to settle $55M with investors to resolve claims that it misled them about the long-term viability of its pandemic-driven subscriber growth.
If you were damaged due to this situation, you can file for a payout and get your share of the settlement. You can check if you are eligible and other details in the FAQ section below.