Kaskela Law LLC is investigating Chegg, Inc. (“Chegg” or the “Company”) (NYSE: CHGG) on behalf of the Company’s long-term stockholders.
Recently a securities fraud complaint was filed against Chegg on behalf of investors who purchased shares of the Company’s common stock between May 5, 2020 and November 1, 2021. According to the complaint, during that time period Chegg and certain of the Company’s senior executive officers made a series of false and/or misleading statements to investors concerning the primary drivers of the Company’s success dramatically increasing subscribers, growth, and revenues.
Specifically, the defendants are alleged to have falsely touted that the Company was “in a unique position to impact the future of the higher education ecosystem” and that the primary cause of the Company’s success was “[o]ur strong brand and momentum,” which would allow Chegg “to continue to grow and take advantage of the ever-expanding opportunities in the learner economy.” However, the complaint also alleges how at the same time defendants knew: (i) that Chegg’s increase in subscribers, growth, and revenue was a temporary effect of the COVID-19 pandemic that resulted in remote education for the vast majority of U.S. students; and (ii) that the Company’s platform was helping students cheat on their exams. In sum, the complaint details how “Chegg had no basis to believe that the extraordinary, but temporary, growth trends would continue, but failed to adequately inform investors of that reality.”
On November 1, 2021, Chegg reported its financial and operational results for the first quarter in which students returned to campus across the United States. As detailed in the complaint, at that time Chegg stunned investors with fewer-than-expected enrollments and declined to provide 2022 guidance. Following this disclosure, shares of Chegg’s common stock fell $30.64 per share, or nearly 50% in value, to close at $32.12 per share on November 2, 2021, on unusually heavy trading volume.
The investigation seeks to determine whether the members of Chegg’s board of directors have breached their fiduciary duties to the Company and its stockholders in connection with the above alleged misconduct.
Current Chegg stockholders who purchased or acquired shares of the Company’s common stock prior to May 5, 2020 are encouraged to contact Kaskela Law LLC at (484) 229 – 0750, or by completing the form on this page, for additional information about this investigation and their legal rights and options.