With schools looking like they're going to stay closed for the next long while, the online learning tool "Chegg" shows that it has serious potential in an environment where in-person learning isn't possible.
Chegg provides online educational services along with selling physical and digital textbooks. With stay-at-home orders enacted, students have turned to online services to supplement their online school learning which resulted in a 33% increase in service revenue and a 35% increase in subscribers according to their Q1 report.
The company estimates its Q2 net revenues to be between $135 - $137 million, a potential 4.1% increase from Q1.
Chegg CEO, Dan Rosensweig, believes that "our engagement will stay extraordinarily high. Our subscriber growth will likely continue to improve".
Right now, the company is seeing extreme levels of demand as students use the companies services alongside their schoolwork in order to fully understand the material. However, it's hard to believe those levels of demand will continue as students slowly transition back to the traditional classroom way of study. Although students can still utilize the online tool as a learning supplement, most likely students won't remain as dependent on Chegg as they will on study groups and in-person tutors.
Even Dan Rosensweig admits that "I'm not sure it will continue to grow at the same rate that it went, which was just astronomical".
However, consumers are definitely seeing the value in online learning simply as an aid for their education.
The darker side of online learning tools comes when they're used for cheating.
Recent rumors have spread that a "large number of students" in a certain math class at the University of Toronto have actually utilized Chegg in order to cheat on their final. It's hard to expect high school and university students, who's future literally hangs on them getting the best marks, to maintain educational integrity especially when testing is done online. This shouldn't be as large of a problem once physical school resumes.
Overall, Chegg has benefitted from the stay-at-home orders, with share prices increasing 128% from lows of $27.71 on March 18 to its current price of $63.13. As long as students are forced to learn from home, the company should see increases in subscribers. However, once school's do eventually open, Chegg will be seen as a second to in-person learning and growth will become unpredictable.
For the time being, Chegg should continue its growth as it's part of one of the few sectors that have excelled in the unprecedented covid-19 pandemic.