NEW YORK, Jan. 13, 2022 (GLOBE NEWSWIRE) -- Bernstein Liebhard LLP announces that a securities class action lawsuit has been filed on behalf of investors who purchased or acquired securities of Chegg, Inc. (“Chegg” or the “Company”) (NYSE: CHGG) between May 5, 2020 and November 1, 2021, inclusive (the “Class Period”). The lawsuit was filed in the United States District Court for the Northern District of California and alleges violations of the Securities Exchange Act of 1934.
If you purchased or otherwise acquired Chegg securities, and/or would like to discuss your legal rights and options, please visit Chegg, Inc. Shareholder Class Action Lawsuit or contact Joe Seidman toll free at (877) 779-1414 or seidman@bernlieb.com.
Chegg is a provider of online research tools, online tutoring services, digital and physical textbook rentals, and other educational resources.
According to the complaint, Defendants made materially false and/or misleading statements, as well as failed to disclose material adverse facts about the Company’s business, operations, and prospects. Specifically, Defendants failed to disclose to investors that: (i) Chegg's increase in subscribers, growth, and revenue had been a temporary effect of the COVID-19 pandemic that resulted in remote education for the vast majority of United States students and once the pandemic-related restrictions eased and students returned to campuses nationwide, Chegg's extraordinary growth trends would end; (ii) Chegg's subscriber and revenue growth were largely due to the facilitation of remote education cheating an unstable business proposition rather than the strength of its business model or the acumen of its senior executives and directors; and (iii) as a result, the Company's current business metrics and financial prospects were not as strong as it had led the market to believe during the Class Period.
Chegg and several of its senior insiders made materially false and misleading statements during the Class Period about the primary drivers of the Company’s success dramatically increasing subscribers, growth, and revenues. Defendants 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.” In fact, defendants knew 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. Defendants were also aware that the platform was helping students cheat on their exams. Once the pandemic-related restrictions eased and students returned to campuses nationwide and schools and universities implemented protocols to eliminate cheating, students predictably stopped subscribing to the platform. In short, Chegg had no basis to believe that the extraordinary, but temporary, growth trends would continue, but failed to adequately inform investors of that reality.
While Chegg’s stock price was artificially inflated, several officers and directors sold $95 million worth of stock – far exceeding the amount sold in the prior comparable period – including $48 million by the Company’s Co-Chairman, CEO and President and $25 million by the Company’s President of the Learning Services division. Certain putative class members traded contemporaneously with these defendants and were damaged thereby. In addition, the Company took advantage of the artificially inflated trading price of Chegg stock by selling more than $1 billion of common stock to investors in a February 18, 2021 secondary offering at the artificially inflated price of $102 per share. Certain putative Class members purchased stock directly in this secondary offering and have standing to assert additional claims against the Company and the underwriters of that offering pursuant to the Securities Act of 1933.
On November 1, 2021, Chegg revealed its financial results for the first quarter in which students returned to campus across the United States, and stunned investors with fewer-than-expected enrollments and did not provide 2022 guidance. In fact, CEO and President Dan Rosensweig admitted that defendants were aware of the slowdown in September 2021.
On this news, the Company’s stock price plummeted nearly 50% (from over $62 to $32 per share) on more than 45 times the average daily volume as investors realized defendants’ rosy statements about subscribers, growth, and revenues had been misleading, which decline immediately erased billions of dollars in market capitalization.
If you wish to serve as lead plaintiff, you must move the Court no later than February 22, 2022. A lead plaintiff is a representative party acting on behalf of other class members in directing the litigation. Your ability to share in any recovery doesn’t require that you serve as lead plaintiff. If you choose to take no action, you may remain an absent class member.
If you purchased or otherwise acquired Chegg securities, and/or would like to discuss your legal rights and options please visit https://www.bernlieb.com/cases/chegginc-chgg-shareholder-lawsuit-class-action-fraud-stock-473/ or contact Joe Seidman toll free at (877) 779-1414 or seidman@bernlieb.com.
Since 1993, Bernstein Liebhard LLP has recovered over $3.5 billion for its clients. In addition to representing individual investors, the Firm has been retained by some of the largest public and private pension funds in the country to monitor their assets and pursue litigation on their behalf. As a result of its success litigating hundreds of lawsuits and class actions, the Firm has been named to The National Law Journal’s “Plaintiffs’ Hot List” thirteen times and listed in The Legal 500 for ten consecutive years.
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Contact Information:
Joe Seidman
Bernstein Liebhard LLP
https://www.bernlieb.com
(877) 779-1414
seidman@bernlieb.com
