What Happened?
Shares of online study and academic help platform Chegg (NYSE:CHGG) fell 5% in the morning session after it extended losses from the previous day as it agreed to pay a $7.5 million settlement over Federal Trade Commission (FTC) allegations.
The stock declined over 7% the previous day when the news first broke. The FTC claimed that Chegg made it unnecessarily difficult for consumers to cancel their auto-renewing subscriptions for online learning tools, such as homework help.
According to the complaint, the company's online cancellation process was buried on its websites and presented users with a confusing and cumbersome process. Furthermore, the FTC alleged that Chegg continued to charge nearly 200,000 customers since October 2020 even after they had requested to cancel. The settlement payment will be used to provide refunds to consumers affected by these practices.
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What Is The Market Telling Us
Chegg’s shares are extremely volatile and have had 100 moves greater than 5% over the last year. In that context, today’s move indicates the market considers this news meaningful but not something that would fundamentally change its perception of the business.
The previous big move we wrote about was about 22 hours ago when the stock dropped 3.7% on the news that the company agreed to pay $7.5 million to settle Federal Trade Commission (FTC) allegations that it made canceling recurring subscriptions unnecessarily difficult for consumers.
Chegg is down 17.6% since the beginning of the year, and at $1.39 per share, it is trading 47.7% below its 52-week high of $2.65 from December 2024. Investors who bought $1,000 worth of Chegg’s shares 5 years ago would now be looking at an investment worth $20.91.
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