Miami-based Galloway Capital Partners has taken a 5.44% stake in Chegg Inc., filing a Schedule 13D with the U.S. Securities and Exchange Commission to disclose its position. The investment firm, led by Chief Investment Officer Bruce Galloway, calls Chegg materially undervalued at its current share price of $0.88 and a market capitalization of $95 million, which has fallen nearly 49% over the past six months. Galloway supports separating Chegg's business units to unlock shareholder value.
Chegg's Business Faces Market Pressures
Chegg operates in the education technology sector, offering online learning tools including homework help and skill-building resources. Its Skilling segment produces about $72 million in annualized revenue, while the Academic Services business stands ready to generate cash flow in coming years. The firm's Schedule 13D filing underscores a catalyst-oriented strategy, targeting public companies where market prices overlook underlying strengths.
Call for Strategic Restructuring
Bruce Galloway argues that Chegg's share price stems from a misunderstanding of its operations. He advocates a focused structure through separating units, allowing each to pursue tailored strategies. Such a move could clarify revenue streams and improve operational efficiency, addressing the disconnect between performance and valuation.
Engagement with Leadership Planned
Galloway Capital intends to discuss value-enhancing opportunities with Chegg's management and board. This activist approach often pressures companies toward changes like spin-offs or cost cuts. For Chegg, with its low market cap, such interventions carry weight, potentially reshaping its path amid edtech sector challenges.