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Chegg's alternative data may be showing cracks in the textbook retailer's engagement

8 months ago by Jon Marino in

The makers of those enormous and overpriced college textbooks are making a shift to digital and pushing students to buy used - and it's bad news for Chegg ($NYSE:CHGG), the California-based retailer and educational services platform. Earnings are up next week for Chegg, and some of the alternative data the company generates could give investors pause after a long, winning run on public markets for the stock.

In the second quarter, Chegg job postings fell by a third, in what appears to be a bit of a downtime for the hiring. Still, shareholders should stay sanguine - the stock is up fully 50% from the beginning of the year, and a rebound in both hiring and social traffic could mean another leg up for a stock that has already hit all-time highs after spending years disappointing investors post-IPO. 

Students still like Chegg - maybe, a little bit less than they once did. The textbook seller is seeing a ceiling for Facebook ($NASDAQ:FB) Likes, around 635,000, but troughs cut deeper each year, as some users disengage with the brand completely (hopefully, because they've graduated). A big rebound in Likes will be a terrific signal to investors - but, they will not see it, until next quarter (we'll be back with more before Chegg's next earnings report). 

In spite of the social data slowdown, the company's web traffic history matches its stock price trajectory nicely. And, we continue to see, that Chegg shoppers are still active at the company's website. In recent years, web traffic is up substantially. 

Analysts tracked by Zacks Investment Research are expecting EPS $0.04 for Chegg when the company announces results Monday July 29. But Chegg's big test may come later. 

About the Data: 

Thinknum tracks companies using information they post online - jobs, social and web traffic, product sales and app ratings - and creates data sets that measure factors like hiring, revenue and foot traffic. Data sets may not be fully comprehensive (they only account for what is available on the web), but they can be used to gauge performance factors like staffing and sales. 

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Jon Marino

Jon Marino is Thinknum's finance editor, covering the impacts of alternative data on public companies and investors. Prior to joining Thinknum, Jon worked in the ...

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