How to play Chegg Inc. (NYSE:CHGG) safely?


Shares of CHEGG, INC (NYSE:CHGG) are currently poised at 18.85% from the open today and are trading at $11.79. More than 13,036,700 shares have exchanged hands compared to an average trading volume of 704.83K. At the current pps, the market cap stands at $1.10B. The stock prices of CHEGG, INC (NYSE:CHGG) are currently trading at 27.46% below its 52 week high and 176.76% above its 52 week low.

CHEGG, INC (NYSE:CHGG) has been in the news for all the right reasons.

Chegg, Inc. CHGG, a student-first connected learning platform, reported adjusted loss of 3 cents in first-quarter 2017, narrower than the Zacks Consensus Estimate of a loss of 6 cents.

Meanwhile, net revenue of $62.60 million surpassed the Zacks Consensus Estimate of $58.35 million by 7.3% but declined 6% year over year. However, non-GAAP total net revenue increased 34% year over year, driven by growth in Chegg Services.

CHEGG, INC (NYSE:CHGG) is all set to announce its earnings on May 01/a. As per Zack’s analyst ratings, CHEGG, INC (NYSE:CHGG) currently has an average brokerage rating of 1.33. On a scale of 1 to 5, a rating of 1 or 2 would indicate a buy, and a rating of 4 or 5 would signify a sell recommendation. A rating of 3 would indicate a hold on the stock. The consensus target price on (NYSE:CHGG) is $11.6 with a high of $12.5 and a low of $10.

Let’s take a look at the technical analysis.

The Barchart Technical Opinion rating is a 100% Buy and ranks in the Top 1% of all short term signal directions. Longer term, the trend strength is in the Top 1%. Long term indicators fully support a continuation of the trend. The market is in highly overbought territory. Beware of a trend reversal.

The Exponential Moving Average (EMA) is similar to a simple moving average (average price over a set period) but it utilizes a weighting factor that exponentially declines from the most recent data point (recent prices are weighted higher than oil prices). EMA analysis compares the short term (5 days and 13 days), intermediate term (20 days) and long term (50 days) EMA’s. The respective EMA’s will give bullish signals when trading above trailing EMA’s and below the current price and vice versa. EMA alerts include crossovers (i.e the 5 day EMA crosses above/below the 20 day EMA) and EMA convergencies (5 day EMA equivalent to 13 day EMA). The long term and short term EMA’s of 9.85 and 8.34 are lower than the current trading price suggesting a bullish pattern in both short term as well as long term.

The relative strength index (RSI) is a momentum oscillator that is able to measure the velocity and magnitude of stock price changes. Momentum is calculated as the ratio of positive price changes to negative price changes. The RSI analysis compares the current RSI against neutral(50), oversold (30) and overbought (70) conditions. Alerts will inform you when stocks recede from oversold/overbought levels or breakthrough neutral (50). The current RSI is 90.62 suggesting a bullish price action.

As such, while we believe CHEGG, INC (NYSE:CHGG) represents a compelling growth story exposed to several secularly attractive markets, it would be interesting to see how it fairs for long-term investors.

Chegg, Inc. provides a social education platform. The Company rents and sells print textbooks; and provides eTextbooks, supplemental materials, homework help, textbook buyback, courses, and college admissions and scholarship services, as well as offers enrollment marketing and brand advertising services. Chegg, Inc. is headquartered in Santa Clara, California.

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